Alibaba reports profit drop amid AI push; TikTok settles privacy suit

Alibaba Group reported its financial results for the April-June 2026 quarter, showing a 9% year-on-year increase in revenue to 268.95 billion yuan. However, net profit fell by 75% to approximately 10.4 billion yuan. This decline is attributed to increased strategic investments in artificial intelligence (AI) infrastructure and a reduction in gains from the sale of investment assets.

Despite the profit drop, Alibaba Cloud saw significant growth, with AI-related cloud computing service revenue rising 45% year-on-year to 48.437 billion yuan. The company is executing a long-term plan to invest 380 billion yuan in cloud and AI infrastructure over three years, having already deployed approximately 190 billion yuan.

In a separate development, TikTok has reached a $400 million settlement with the U.S. Department of Justice regarding allegations of violating children's privacy. The settlement includes an immediate $300 million payment, with an additional $100 million to be paid once a 2019 consent decree related to its predecessor, Musical.ly, is vacated. The lawsuit alleged that TikTok allowed users under 13 to create accounts and collected their personal information without parental consent, violating the Children's Online Privacy Protection Act (COPPA).