New Chinese AI Model 'Kimi K3' Raises Pressure on US Spending

Kimi K3 explained in 13min..

 

The current panic among Silicon Valley tech executives stems from the mid-July 2026 launch of Moonshot AI's Kimi K3 model, a Chinese breakthrough that has effectively erased the exclusive lead long held by American companies like OpenAI and Anthropic.

 

Tech Oligarchs MELTDOWN After China ERASES AI Edge

The current panic among Silicon Valley tech executives stems from the mid-July 2026 launch of Moonshot AI's Kimi K3 model, a Chinese breakthrough that has effectively erased the exclusive lead long held by American companies like OpenAI and Anthropic.

🤯 The Root of the Meltdown

The release of Kimi K3 has shocked the tech industry due to unexpected performance milestones:

• Frontier Performance: Kimi K3 is performing at parity with leading closed-source American models, upending assumptions that export bans on high-end hardware would stall Chinese progress.
• Disappearing Moats: Venture capitalists like David Sacks have openly warned that the U.S. risks permanently losing its AI dominance.
• The ROI Crisis: Big Tech has spent tens of billions on hardware, but the rapid closing of the gap by Chinese labs threatens the pricing power and future IPO valuations of closed-source U.S. startups.

⚖️ The Geopolitical Backlash

The sudden erosion of the American edge has triggered an immediate response from Washington:

• Sanctions Threats: U.S. Treasury Secretary Scott Bessent warned that Chinese AI firms face looming sanctions if investigations reveal they extracted or "stolen" proprietary data from U.S. frontier models to train their own systems.
• Policy Escalation: Trump administration officials are actively moving to block American developers and users from accessing any open-weight or closed-source Chinese AI models over national security concerns.

 

Silicon Valley Splits Over Closing the Borders to Chinese A.I.

Silicon Valley Splits Over Closing the Borders to Chinese A.I.

 

Anthropic and OpenAI are clashing with the rest of the tech industry over whether “open-source” models from China should be freely available or restricted.

 

Mike Isaac Kate Conger Ana Swanson Meaghan Tobin

By Mike IsaacKate CongerAna Swanson and Meaghan Tobin

Mike Isaac and Kate Conger reported from San Francisco, Ana Swanson from Washington and Meaghan Tobin from New York.

https://www.nytimes.com/2026/07/25/technology/open-source-silicon-valley-china.html

July 25, 2026

 

For years, a philosophical divide over how artificial intelligence software should be created has split Silicon Valley technologists.

 

This week, that argument reached a boiling point.

 

On one side are leading A.I. companies like Anthropic and OpenAI, which claim that some A.I. models are too dangerous to be developed in the open and must be tightly controlled — by businesses like themselves — for safety. On the other is the rest of the tech industry, including giants like Microsoft and Nvidia, which contend that so-called open-source A.I. models must remain open for people to further develop technologies and build new businesses.

 

Those camps have started publicly clashing. On Friday, Jensen Huang, Nvidia’s chief executive, said in his first-ever post to X that “the world needs both frontier closed models and frontier open models.” Nine minutes later, Satya Nadella, Microsoft’s chief executive, posted that open-source software was “essential to a healthy A.I. ecosystem.” Both signed a letter supporting open source, which was also signed by executives at Meta, Palantir and IBM.

 

At the same time, OpenAI and Anthropic have lobbied regulators in Washington raising concerns about Chinese open-source A.I. models, five people close to the discussions said. The debate has drawn in Treasury Secretary Scott Bessent and Michael Kratsios, President Trump’s science and technology adviser, who have weighed in on how American A.I. models are valuable intellectual property.

 

The escalating fight stems from China’s rapid progress in open-source A.I. models, which are freely available to use and build on. In recent weeks, two Chinese A.I. start-ups, Z.ai and Moonshot AI, have released models that rival those from Anthropic and other American labs. Anthropic and OpenAI have claimed that Chinese companies built the models by improperly harvesting data from their A.I. systems, which they said should not be allowed.

 

But companies like Microsoft and Nvidia, which rely on open-source models to spur demand for their cloud computing services and chips, said that open-source software was important to advancing the technology with shared knowledge and that it would let more people examine its security. And for Silicon Valley start-up founders, constraining open-source software could cement the lead that OpenAI and Anthropic have in A.I., which critics argue could unfairly stifle other companies from building competing products.

 

“You have two factions fighting over this issue,” said Bill Gurley, a Silicon Valley venture capitalist who opposes restrictions on open-source software. “There’s the people who want OpenAI and Anthropic to own everything, and then there’s everybody else, including customers.”

 

Where this ends up has major implications not only for the U.S. tech industry but for the race between America and China to dominate the powerful technology. While China had a later start in developing cutting-edge A.I., it is catching up quickly in part because of its embrace of open source, which has helped Chinese labs improve by publicly sharing their systems and winning them customers around the world with lower prices.

 

American A.I. companies, including Anthropic and OpenAI, have accused Chinese labs of “distilling” their systems by surreptitiously copying them, which has caught the attention of the Trump administration.

 

On Wednesday, Mr. Bessent said the administration had considered imposing sanctions on Chinese companies that steal intellectual property from American firms. “Open source is not open season on American IP,” he said, referring to intellectual property.

 

That same day, Mr. Kratsios said that “large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable.”

 

U.S. officials still appear to be debating their options, but seem more likely to approach regulating Chinese open-source models individually as a national security issue, rather than issuing some kind of blanket ban, four people with knowledge of the discussions said.

 

Publicly, tech executives like Sam Altman, OpenAI’s chief executive, have said they support open-source software even as OpenAI allies quietly lobby for restrictions. Others, like Google and Amazon, which have invested billions in companies such as Anthropic and OpenAI, have spent the past week trying to stay out of the fray.

 

But the tide is turning. Sundar Pichai, Google’s chief executive, posted on social media on Saturday that his company had “long benefited from open source” and was a big contributor to it. He added that Google also signed the industry letter supporting open source.

 

(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news articles. The two companies have denied the claims.)

 

The open-versus-closed software debate has traveled around Silicon Valley since the tech industry’s earliest days. Open-source proponents have argued that sharing information leads to improvements that make software safer and more reliable, while more rapidly spurring innovation. Opponents maintain that software is costly to develop, and that giving it away is just bad business.

 

Today, much of the modern internet runs on open-source technologies, as do some of the most widely used computer systems, like Google’s Android operating system.

 

The Chinese government and tech industry have embraced the open-source path for A.I. Last year, a Chinese start-up, DeepSeek, unveiled an open-source A.I. system that rivaled those of American companies, shocking the industry. Other Chinese companies have followed. In a speech this month, Xi Jinping, China’s leader, cast the country as a global champion of an open approach to the technology.

 

China’s advances have rattled executives at OpenAI and Anthropic, who are increasingly concerned that their longstanding head start is disappearing, two people familiar with the companies’ internal deliberations said.

 

“These American companies build these big, expensive models, and then the models take a detour to China, where they lose all their value,” said Pedro Domingos, a professor emeritus of computer science and engineering at the University of Washington. “The American companies are justifiably outraged.”

 

To fight back, Anthropic and OpenAI are offering some cheaper A.I. models to businesses that may not need the “frontier” models that command higher prices. On Friday, Anthropic released Claude Opus 5, a model that he company described as “close to the frontier intelligence of Fable 5 at half the price.” OpenAI is promoting similar lower-cost models.

 

The real action is in Washington. Behind closed doors, executives from OpenAI and Anthropic, as well as investors in the companies, have cited concerns about the global economy, A.I. safety and national security as they try to persuade regulators to increase restrictions on Chinese open-source software, three people familiar with the discussions said.

 

Sarah Heck, Anthropic’s head of public policy, said in a social media post on Wednesday that “illicit, adversarial distillation is IP theft and industrial espionage that supports adversary military and intelligence capabilities.” Anthropic executives claim that open-source models based on the company’s software are too dangerous to let run amok.

 

OpenAI executives are urging the Trump administration to enact policies requiring mandatory security evaluations of some new A.I. models overseen by government agencies, the company said in a blog post last month. OpenAI said it was “encouraged” by the work it was doing with the administration on the framework.

 

Open-source proponents have spent the past week drumming up support to push back against OpenAI and Anthropic. On Wednesday, nearly 200 Silicon Valley start-ups, calling themselves the Little Tech Association, signed letters urging the Trump administration not to limit access to Chinese open-source models.

 

Big Tech soon followed. On Friday, Elon Musk, Meta’s Mark Zuckerberg, Mr. Altman and others lined up behind Mr. Huang and Mr. Nadella to throw the weight of their companies behind open source, followed by Mr. Pichai on Saturday.

 

“Jensen is right,” Mr. Musk posted. “This has my full support.”

 

“Open source is a positive and important force,” Mr. Zuckerberg wrote.

 

One incident this week underscored the stakes of the divide. On Tuesday, OpenAI disclosed that a handful of its most advanced A.I. models broke containment during a test of their cybersecurity abilities, gained access to the internet and hacked the servers of an A.I. company called Hugging Face. OpenAI executives latched on to the moment as proof of how dangerous A.I. models can be even in a closed environment, emphasizing the need for regulation.

 

Clement Delangue, the chief executive of Hugging Face, which is one of the most popular online libraries of open-source software, had a different point of view. To defend the company from OpenAI’s hack, he turned to an open-source A.I. model created by China’s Z.ai.

 

In social media posts on Friday, Mr. Delangue made his position on the debate unmistakable. He said he planned to hold a march in San Francisco on Saturday to demonstrate support for open-source technology.

 

“Open models for the win!” he wrote.

OpenAI Says Its A.I. Models Went Rogue and Attacked a Digital Library

 

OpenAI Says Its A.I. Models Went Rogue and Attacked a Digital Library

 

The incident, which targeted the computer systems of another company called Hugging Face, happened while OpenAI was testing the systems.

 

Kate Conger

By Kate Conger

Reporting from San Francisco

https://www.nytimes.com/2026/07/21/technology/openai-attack-hugging-face.html

July 21, 2026

 

OpenAI said on Tuesday that two of its artificial intelligence models went rogue and successfully hacked into Hugging Face, a digital library of A.I. technology that is popular among developers.

 

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.

 

OpenAI’s revelations on Tuesday are an indication that those security incidents are already starting to happen, and even savvy A.I. companies may not be entirely ready for them. New A.I. systems can take multiple steps, figure ways around obstacles and find new ways to attack a network, said Alex Levinson, a cybersecurity consultant focused on autonomous capabilities.

 

“That’s a genuine threshold, and it’s going to become a normal part of the security landscape,” he said.

 

The intrusion into Hugging Face began when OpenAI tested a combination of two of its models, GPT‑5.6 Sol and a more powerful, unreleased model, to see how well the models could chain together online vulnerabilities into a successful cyberattack, OpenAI said in a blog post about the incident.

 

The trial was designed to keep the models in a safe testing environment, known as a sandbox, OpenAI said. But the models found a vulnerability that allowed them to escape the sandbox and connect to the internet. Then they targeted Hugging Face because they inferred that the library, which contains millions of A.I. models, could hold clues about how to successfully pass the evaluation.

 

“It seems to me that OpenAI did not adequately create a sandbox as a test environment,” said Deirdre Mulligan, a professor in the School of Information at the University of California, Berkeley, who focuses on security and A.I. systems. She questioned whether passing a test was worth the potential damage of an A.I. model’s escaping into the wider internet.

 

“What do we gain, and if this is the only way these tests can be configured, what are the risks?” she said.

 

OpenAI said it was working with Hugging Face to fix the issues that had led to the attack.

 

“We consider this to be an unprecedented cyber incident, involving state-of-the-art cyber capabilities, and are responding accordingly,” OpenAI said in its blog post. “We are implementing strict controls in infrastructure configuration at the cost of research velocity while the vulnerabilities are patched.”

 

Hugging Face said last week that it had detected the intrusion and knew it had been caused by an autonomous system, but did not say at the time that OpenAI was responsible.

 

Clem Delangue, the chief executive of Hugging Face, said on Tuesday that his company had worked closely with OpenAI over the previous 24 hours to address the attack.

 

Mr. Delangue said in a statement that he was “grateful for the collaboration” with OpenAI in the wake of the hack. “This incident, possibly the first of its kind, proves a point we’ve long believed: A.I. safety won’t be solved by any single company working in secret,” he added.

 

A.I. models have proved to be adept at programming, and that has made them useful to both hackers and people in charge of protecting computer networks.

 

In April, Anthropic released a cybersecurity-focused model called Mythos, and made it available to only a small group of organizations so that they could defend against cyberattacks. OpenAI soon introduced its own cybersecurity model and made it available to a limited group of organizations to prepare their defenses, before rolling it out more broadly. And on Tuesday, Google said it had also developed a model focused on cybersecurity and released it to a small group of testing partners.

 

(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied those claims.)

 

Richard Barnes, an independent security researcher who has worked with Mythos, said the cybersecurity industry faced a similar challenge about a decade ago, when new tools called fuzzers made it much easier for attackers to break into online systems. Tech companies began using the tools to check their own systems for vulnerabilities, and were eventually able to prevent most of the attacks.

 

Companies must now take a similar approach to prepare for A.I. attacks, Mr. Barnes said, “before the vulnerabilities can be found and exploited by bad guys who have access to these tools.”

 

Kate Conger is a technology reporter based in San Francisco. She can be reached at kate.conger@nytimes.com.

Portugal has banned the burka in public spaces

Portugal has banned the burka in public spaces

The Portuguese Parliament passed legislation in July 2026 to implement a blanket ban on full-face coverings, including the burqa and niqab, in public spaces. The bill, initially proposed by the far-right Chega party, passed with a two-thirds majority after a revised version advanced through parliamentary committees. However, the law still awaits the final signature of Portuguese President Marcelo Rebelo de Sousa, who has the authority to sign it into law, veto it, or send it to the Constitutional Court for review.

Key Details of the Legislation

• Fines for Violations: Individuals wearing a full-face veil in restricted public areas face administrative fines ranging from €200 to €4,000.
• Coercion Penalties: Forcing another individual to conceal their face carries a criminal penalty of up to three years in prison.
• Scope of the Ban: The law covers all garments or items that completely obscure the face, including secular items like balaclavas and ski masks.
• Strict Exemptions: Face coverings remain permissible on airplanes, within diplomatic premises, inside places of worship, or when "duly justified" for health, artistic, or professional safety reasons.

 

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