China’s AI models have Trump’s AI world at war with itself

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Over the weekend, several current and former advisors to President Donald Trump on AI publicly lobbed insults at the country’s leading AI companies. David Sacks, the president’s AI and crypto “czar” until March, branded Anthropic’s models as “lobotomized” and “woke.” Emil Michael, a top Pentagon official, called OpenAI’s new head of strategic futures a “supreme village idiot.”

It began because no one can agree on what to do about Kimi, a free, open source model that Chinese AI company Moonshot launched last week. It appears to rival the intelligence of models from OpenAI and Anthropic, which are very much not free.

Kimi and other Chinese models like it pose a real problem for Trump. And they’re dividing the top AI strategists in his orbit into factions. Every time a new smart, free model from China like Kimi gets released, US companies see less reason to fork out money to access models from Anthropic or OpenAI. Given that enthusiasm for these and other AI companies is driving an outsized share of economic growth, China’s AI models create both economic and political problems for the president. They are “a threat for an administration that really doesn’t want more economic bad news,” Anton Leicht, a fellow at the Carnegie Endowment, wrote on X. They’ve already rattled US stocks.

What is Trump to do? First, consider that this is all happening just a week after New York imposed the country’s first state ban on new data centers. There is growing distrust of AI companies, and I imagine a not-insignificant share of Americans would have little sympathy for OpenAI or Anthropic as they fend off cheaper competitors, and would say it’s not the government’s job to protect their interests.

On this point, they’d see a sliver of agreement (and really just a sliver) with David Sacks, who on July 19 criticized top AI companies that “want the government to eliminate their open source competition.” He has also argued that Chinese AI models have become popular because they come with fewer restrictions on how people can use them (putting aside the built-in state censorship).

Sacks, however, is out of a job. He no longer has a formal role advising Trump, and his position that more open AI is better has been largely replaced in the administration by one that sees a larger role for government intervention. The thinking behind this view is that because AI models have gotten strong enough to pose threats to national security, the government must control how they’re used.

This position has fueled the new White House review process that aims to vet AI models’ security before they’re released. Dean Ball, a former Trump AI advisor who now works for OpenAI, criticized it over the weekend as a “de facto licensing regime for frontier AI.” Ball predicted Trump may solve his Chinese open source problem with a bit of soft power, perhaps by making US companies afraid to use models like Kimi. That drew a response from Michael, who, with Secretary of Defense Pete Hegseth, has been the agency’s main liaison with AI companies. Michael called Ball the AI industry’s “supreme village idiot,” bristling at the suggestion that the government would quietly strong-arm companies rather than, as Michael put it, go through “the democratic process not some Deep State scheme.”

Left out of the conversation has been how a model like Kimi got so good in the first place. For much of the Biden administration and even the beginning of Trump’s second administration, keeping China from getting top chips was a priority. Those export controls have loosened—Trump made the controversial decision to allow Nvidia to sell more chips to China, in exchange for the US government taking a cut—and the government has alleged that some chip smuggling has taken place. But China nonetheless has limited computing power, and it’s not clear what chips the company behind Kimi used to train the model.

It’s possible that the process involved some distillation, a practice in which AI models are trained on the outputs of existing AI models. OpenAI and Anthropic have long complained that Chinese AI companies do this, and they have requested government help to put a stop to it. In April, they got it, when the Trump administration announced a series of efforts to curb the practice.

But Kimi is out there and free, and it is nearly as good as the Anthropic model the US government deemed so powerful that it was briefly shut down because it threatened national security. The weekend’s sparring suggests many in Trump’s orbit see that as a wake-up call. But nobody can agree on what for.