Meta Platforms (NASDAQ:META) slipped 1.2% on Wednesday, while Alibaba (NYSE:BABA) gained 2%, after a Bloomberg report said Meta is shifting its AI strategy and working on a closed, revenue-generating model that draws on technology from several Chinese companies, including Alibaba.

The report said Meta is building a new AI system internally referred to as “Avocado,” which is expected to launch next spring as a “closed” model that Meta can fully govern and commercialize — a marked shift away from CEO Mark Zuckerberg’s longstanding push for open-source AI. This would bring Meta’s strategy closer to those of rivals like Google and OpenAI, both of which rely on proprietary models.

Bloomberg also reported that Meta’s TBD Lab is incorporating multiple external models into Avocado’s development, including Alibaba’s Qwen. The dependence on Chinese models represents a notable reversal for Zuckerberg, who had previously voiced concerns that such models could be influenced by state censorship.

The strategic change comes after Meta’s open-source Llama 4 failed to meet expectations earlier this year. In the aftermath, Zuckerberg reassigned several people involved in that effort and began personally recruiting elite researchers with multimillion-dollar compensation packages — including Chief AI Officer Alexandr Wang, who joined the company following a $14.3 billion investment arrangement with his firm, Scale AI.

The report further highlighted internal strains: Wang is said to be frustrated by what he sees as Zuckerberg’s heavy-handed oversight of Meta’s AI projects, while veteran AI leader Yann LeCun recently exited the company after disputes over how resources were being allocated.

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