China's new Kimi model divides Trump's team, fuels push to ban Chinese AI

A free, open-source AI model from China has sparked a public meltdown inside Donald Trump’s circle of AI advisors, exposing a deep rift over how to respond to Beijing’s technological gains. The flashpoint is Kimi, a model released last week by Chinese firm Moonshot that appears to rival the intelligence of paid offerings from OpenAI and Anthropic. The fallout was immediate and vicious. David Sacks, a Trump advisor, called Anthropic’s models “lobotomized” and “woke,” while Pentagon official Emil Michael labeled OpenAI’s new head of strategic futures a “supreme village idiot.”

The rancor masks a genuine economic threat. Every time a powerful, free model emerges from China, it erodes the business case for US companies that charge for access. That’s creating a political problem for a president who has leaned heavily on American AI dominance as a strategic asset. The administration is now reportedly weighing a ban on Chinese AI models like Kimi, and Beijing is signaling it may tighten its own export controls on AI technology and chips to prevent Western acquisition of its startups.

Not everyone in Trump’s orbit thinks restrictions are wise. Tech investor Chamath Palihapitiya called a potential ban “a terribly self-defeating form of intervention,” a view that underscores the split between hawks who see an existential tech war and business realists who worry about kneecapping innovation. The infighting makes clear that there’s no unified playbook—just a growing anxiety that China’s bet on open-source is paying off in ways Washington didn’t anticipate.

Meanwhile, the economic stakes for American AI firms were put in stark relief by another development: a court approved Anthropic’s record $1.5 billion copyright settlement for using pirated works to train Claude. It’s the largest known copyright payout in history, yet many authors and creators still don’t see it as a win—just the cost of doing business in a field where the prize feels more uncertain than ever.