People visit the Moonshot AI stand, featuring Kimi K3, during the World Artificial Intelligence Conference
U.S. President Donald Trump is under pressure to respond to the increasing success of Chinese AI models that many companies prefer to the more powerful, but pricier, U.S. versions from Anthropic or OpenAI.
The issue came to the fore this week with the release of Kimi K3 by Moonshot, which White House officials say was developed by stealing the capabilities of Anthropic's most powerful model through a process called distillation.
The method is widely used across the industry, but U.S. officials say Chinese firms have deployed it at scale to illicitly copy proprietary American systems.
Treasury Secretary Scott Bessent this week threatened sanctions against China, with reports the U.S. is weighing a ban or curbs on foreign-made open source models that are often built through distillation
Earlier this year Anthropic sent letters to U.S. lawmakers warning about the practice, formally accusing Chinese firms Moonshot, DeepSeek and MiniMax of industrial-scale distillation of its Claude models.
Open source, or open-weight, models cost less and use source code that programmers can customize, something that is especially appreciated by startups and companies that do not want to be beholden to models from Anthropic, OpenAI or Google that cost money and must be taken as is.
The startup community has asked the White House to forgo any plan to block foreign-made open source models, saying it would just unfairly reward the U.S. AI giants, thwart competition and stick entrepreneurs with high prices for AI.
On July 22, a group of 179 startups wrote a letter to the Trump administration urging it to think twice against any outright ban or strict curbs on foreign-made models.
"Denying American startups access to models available abroad would stifle competition, entrench incumbents, and function as a tax on intelligence," the letter from the Little Tech Association said.
Some critics of limiting open source models believe that OpenAI and Anthropic are trying to save themselves by eliminating the emergence of this rival technology.
The two AI giants are facing huge financial pressure ahead of expected IPOs in coming months, with Wall Street taking a more closer look than ever at their business performance before their expected public listings.
"The Kimi Panic needs to stop," said David Sacks, the White House's former chief on AI policy, who still has the president's ear.
"President Trump's light-touch regulatory approach is working...As long as we don't sabotage ourselves with unnecessary rules, the U.S. will continue to win," he said on X.
