A Chinese model split Silicon Valley. Now the startups are fighting back.

Nearly 200 US startups, organized as the Little Tech Association, urged the Trump administration not to block American access to Chinese open-weight AI models, warning a ban would gut the next wave of US companies. The signatories, including Y Combinator and Proton, argued for targeted safeguards instead of a broad ban, saying the move would hand the market to giants like Anthropic and OpenAI. The plea follows reports that the administration might ban Chinese models after Moonshot's Kimi K3 outperformed Anthropic's Fable 5 and OpenAI's GPT-5.6 Sol on coding tests.

Silicon Valley does not usually gang up on its own. This week it did. Nearly 200 US startups have urged the Trump administration not to block American access to Chinese open-weight AI models. A ban, they warn, would gut the next wave of US companies. The plea, first reported by Politico https://www.politico.com/news/2026/07/22/startup-founders-urge-trump-not-to-shut-off-chinese-open-weight-ai-01008992 , came in letters from the newly formed Little Tech Association. The signatories include Y Combinator and the privacy company Proton. On Wednesday they wrote to President Trump, Commerce Secretary Howard Lutnick, and the White House science chief Michael Kratsios. Their message was blunt. Do not reach for a broad ban. Use targeted safeguards instead. Why startups want the Chinese models Open-weight models are those whose weights are published, so anyone can download and run them. Moonshot’s Kimi K3 https://thenextweb.com/news/moonshot-kimi-k3-largest-open-model and Alibaba’s models https://thenextweb.com/news/alibaba-qwen38-second-only-fable5-open-weight are cheap, capable, and free to build on. Cash-strapped founders lean on them rather than pay for credits from Anthropic or OpenAI. A ban, the group argues, would not stop the models spreading. It would just hand the market to a few giants. “There’ll be hundreds of companies that instantly die,” said Suhail Doshi, founder of the startup Particle and an association member. “It’s great for Anthropic. We’re all going to have to spend money on Anthropic.” A rare rift with Anthropic That is the sharp edge of the story. The fight has split the AI industry. Anthropic, with OpenAI, has pushed hardest for curbs on Chinese models, citing security. The startups say bans would do little for security and plenty of harm to competition. The Information reported https://www.theinformation.com/articles/silicon-valley-unites-anthropic-chinese-ai-restrictions that the two labs now stand almost alone in the industry. The Little Tech Association wants precision. “A scalpel rather than a sledgehammer,” its executive director Harry Godfrey said. The aim, he added, is the lightest touch that addresses real security concerns without raising costs or blocking access. Washington turns up the heat The revolt follows weeks of escalation. It began after Moonshot released Kimi K3, a model that beat Anthropic’s Fable 5 and OpenAI’s GPT-5.6 Sol on coding tests. Reports then suggested the administration might ban Chinese models outright. Officials have kept up the pressure. Treasury Secretary Scott Bessent said on Fox Business that the US could “sanction” https://thenextweb.com/news/bessent-china-ai-sanctions-huang-defends firms that steal American intellectual property. Kratsios went further. He alleged Moonshot had distilled Anthropic’s Fable model https://thenextweb.com/news/white-house-moonshot-banned-nvidia-chips-kimi-k3 and used banned Nvidia GB300 servers to train K3. Moonshot has not responded. Separately, Commerce’s export-control arm has opened a formal inquiry into whether Chinese firms are getting restricted US chips. For now, the ban is only talk. A White House official called reports of one “baseless speculation”, and said a blanket ban was not seriously discussed. But the rhetoric is not cooling, and the split it has exposed is real. The giants want walls. The startups want the door left open. And in Shanghai, Xi Jinping has been pitching cheap, open AI https://thenextweb.com/news/xi-jinping-waic-2026-shanghai-ai-speech to the rest of the world. Get the TNW newsletter Get the most important tech news in your inbox each week.