ByteDance is best known in the U.S. as the owner of TikTok. In China, the tech giant is also becoming known as a major force in cloud computing—so much so that it is now threatening Alibaba Group, long the undisputed king of cloud services in China.

In one sign of the intensifying rivalry, executives at Alibaba have started to focus on the type of cloud offerings in which ByteDance has an edge: selling cloud-based access to AI models. Last month, Alibaba CEO Eddie Wu attended a meeting with Alibaba Cloud's sales executives and made it clear that selling AI models, known in the industry as model as a service, is a top priority for the company's long-term success, according to an Alibaba Cloud manager who attended the meeting.