Silicon Valley Power Struggle Halts US Bans on Chinese AI Models

According to a New York Times investigation, Trump administration officials, including chief of staff Susie Wiles, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, debated whether to intervene more forcefully in the open-source AI market. Proposed measures included sanctions, a trade blacklist on Chinese providers of open models, and a ban on US cloud companies doing business with them. The administration also discussed restricting which models federal agencies could use and regulating via the Commerce Department. The catalyst was the rise of powerful Chinese models, notably Kimi K3 from Moonshot AI, which matches top US models in some areas. Michael Kratsios, the White House science and technology policy chief, accused the company on X of distilling Anthropic's Fable model, calling such technology theft unacceptable. OpenAI and Anthropic, which keep their models proprietary, pushed for restrictions on Chinese rivals citing national security, while Nvidia, Microsoft, Google and Meta lobbied against them, arguing that open models accelerate innovation and cyber defense. Nvidia CEO Jensen Huang became the face of the resistance, posting on X for the first time on July 24 to defend open models and launching a security tools alliance that grew to over 230 members. Christopher Padilla, a former Commerce official, characterized the dispute as a cage fight over the future of the AI industry, with money and market power at stake. Industry insiders expect no harsh actions before Xi Jinping's visit in September. OpenAI told the Times that both open and closed models have a role, and that progress by Chinese open-weight models argues for a national framework. Anthropic declined to comment, though CEO Dario Amodei has publicly stated his position on open source. The Times also notes its own copyright lawsuit against OpenAI and Microsoft.