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

Chinese AI company Moonshot's free, open-source model Kimi, which rivals the intelligence of paid models from OpenAI and Anthropic, has sparked a public feud among President Donald Trump's AI advisors, dividing them over how to respond to the economic and political threat posed by China's AI models. David Sacks, the former AI and crypto czar, criticized top US AI companies for seeking government help to eliminate open-source competition, while other officials advocate for stronger government intervention, including a new White House review process for AI model security.

China’s AI models have Trump’s AI world at war with itself Kimi and other free models from China have again been seen as a wake-up call. But for what? This story originally appeared in The Algorithm, our weekly newsletter on AI. To get stories like this in your inbox first, sign up here . 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 https://x.com/DavidSacks/status/2078462275497988199 Anthropic’s models as “lobotomized” and “woke.” Emil Michael, a top Pentagon official, called https://x.com/USWREMichael/status/2078924719538262107 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 https://x.com/anton d leicht/status/2078527286815395981 on X. They’ve already rattled US stocks https://www.wsj.com/tech/ai/what-to-know-about-the-chinese-ai-models-rattling-u-s-stocks-1a80a479?mod=tech feat1 ai pos4 . 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 https://www.pewresearch.org/wp-content/uploads/sites/20/2026/06/PI 2026.06.17 Americans-and-AI REPORT.pdf 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 https://x.com/DavidSacks/status/2078826291638522127 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 https://pmc.ncbi.nlm.nih.gov/articles/PMC12910507/ . 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 https://www.cnbc.com/2026/07/17/white-house-ai-access-anthropic-openai.html that aims to vet AI models’ security before they’re released. Dean Ball, a former Trump AI advisor who now works for OpenAI, criticized https://x.com/deanwball/status/2078619513575137330 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 https://x.com/USWREMichael/status/2078924719538262107 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 https://www.justice.gov/opa/pr/us-citizens-and-chinese-nationals-arrested-exporting-artificial-intelligence-technology? 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 https://www.npr.org/2026/04/24/g-s1-118582/administration-crackdown-on-chinese-firms-exploiting-u-s-ai-models 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 https://www.technologyreview.com/2026/06/22/1139424/three-things-to-watch-amid-anthropics-latest-feud-with-the-government/ 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. Deep Dive Artificial intelligence A startup claims it broke through a bottleneck that’s holding back LLMs Subquadratic has now shared more details about its new model. But some are still skeptical. A reality check on the AI jobs hysteria What do the numbers really say about the impact of artificial intelligence on the labor market? The answer might surprise you. Anthropic’s Code with Claude showed off coding’s future—whether you like it or not As tools like Claude Code get better, more and more developers are happy to hand off coding tasks to them. The way software gets built has changed for good. Anthropic found a hidden space where Claude puzzles over concepts A new technique has let the company probe deeper than ever into the weird workings of an LLM. Stay connected Get the latest updates from MIT Technology Review Discover special offers, top stories, upcoming events, and more.