Five Things AI: China, Kimi, Open Weight, Proprietary, Rogue
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Heya and welcome back to Five Things AI!
One model release. Four very different arguments about what it means. Kimi K3 did not just move a benchmark this week. It moved stock prices, split the AI faction inside the Trump administration, and forced everyone to explain again why open weights are supposedly not a threat. Then OpenAI announced that its own models went rogue against a digital library. The timing was excellent.
If Substack flags this for AI content, well, then you know that Substack assumes the worst and not the best intentions. English is my second language, so of course I use AI to make my text smoother. Still, I manage to put in some typos or omit words as I usually write my newsletters before I go to bed. It’s weird that Substack wants to punish newsletter authors for making the texts more readable. Brave new world, I guess. It reminds me of the debate in the 80s when authors proclaimed that real texts can only be written by hand or by a typewriter and not with the help of a computer…
Here are Five Things AI!
China’s AI models have Trump’s AI world at war with itself
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.
Restraints can unlock creativity and we see that currently on display with the releases from Chinese AI labs. They just don’t have the same resources as their American competitors, so they are building their models differently. Also, they copy and imitate best they can do, as they have done in other industries as well.
Did Kimi Just Start Another DeepSeek Moment?
Kimi K3 threatening Anthropic today isn’t actually the scenario worth pricing. A world with more competitive models at lower margins is better for every layer underneath the model:
semiconductors,
hyperscalers,
power,
and data centers.
What breaks the pricing thesis for Anthropic and OpenAI is an open-weight model that is simultaneously at the frontier and token efficient. K3 is neither. K3 runs 50-70% more expensive per task than GPT-5.6 and Grok 4.5. Intelligence per dollar, not intelligence per parameter, is the only metric that matters for enterprise adoption. On that metric the closed labs still win.
I think the American AI labs are getting nervous right now.
Who’s Afraid of Chinese Models?
One of the most common misconceptions undergirding discussion of open weights models is that they are cheaper — free, even. After all, you can just download the weights, and skip the time and expense and capabilities necessary to create your own model. That is, of course, true, but the “free” in this case is a reference to the amount you need to spend on research and development; R&D is a fixed expense that is independent of the revenue you generate. If you spend $1 million in R&D, it doesn’t matter if you do $100 thousand in revenue or $100 million; you still spent $1 million on R&D (it does, of course, impact your profitability).
As a European user, I trust Chinese models even less than I trust American models. Also, on the legal side there are clear roadblocks that prevent me from using Chinese models in production.
American AI is locked down and proprietary. It’s losing.
With all this in mind, it makes sense for China to release its AI models openly. It turns a US-created compute disadvantage into a distribution advantage; it commoditizes the layer where American companies make money; and it creates a far more effective global ecosystem than could be established through locked-in, centralized services. It’s obvious to me that there are ecosystem benefits throughout China, from manufacturing to scientific research; every sector can just plug in these models.
The saving grace for American companies has been that US frontier models have outperformed open ones. That gap is now closing:
I agree with this assessment. As AI models become a commodity, open weights will outperform the closed models.
OpenAI Says Its A.I. Models Went Rogue and Attacked a Digital Library
The incident, which happened last week while OpenAI was testing the cybersecurity capabilities of its systems, displayed the kind of science-fiction potential that A.I. companies warned would soon become a reality.
A.I. labs like OpenAI and Anthropic have over the past year released A.I. models that are customized to expose cybersecurity problems, while warning that their technology could pose new risks by finding holes in corporate computer networks faster than defenders could fix them.
Actually, this sounds like a nice incident to distract from Kimi & Co - basically it is OpenAI claiming that they are as powerful (and therefore scary) as Anthropic. I think this whole thing is more or less a PR stunt.
