Silicon Valley is completely divided over Chinese AI

Big controversy AI is brewing in Silicon Valley due to the proliferation of Chinese-made AI tools, especially “open-weight” AI systems that can, by some measures, compete with or even surpass some of the best American models. My WIRED colleague Hugo Lowell wrote about the internal debate in the Trump administration over how to deal with these Chinese models. Among AI companies in the Valley, this issue has proven more contentious.

One of the big concerns in both Washington, D.C., and the Valley relates to distillation, where a less capable AI model is trained on the output of a more powerful model. In June, Anthropic accused Chinese tech giant Alibaba of illegally stealing its intellectual property through distillation attacks. Then, earlier this week, the White House said it believed Beijing-based Moonshot AI had developed its Kimi K3 model by distilling Anthropic’s Fable 5 model.

Another big concern is how quickly Chinese models will emerge and spread. The components of the AI ​​model are declared open-weighted, so they can be tuned to suit the user’s needs. But they don’t have the kind of barriers that Anthropic has built its reputation on. Yasser Atalan, deputy director and data fellow at the Center for International and Strategic Studies, notes that the main benefit of open-weight AI models is their speed. spread. It can spread especially easily “through Hugging Face, GitHub, cloud providers, on-premises deployments, and third-party inference platforms,” he wrote. If you’re a humanitarian, and have built a cult around safety and access fees for your large, expensive proprietary models, you have every reason to want to regulate this.

But some Silicon Valley startups — not trillion-dollar companies like OpenAI and Anthropic — don’t really want the U.S. government to put limits on these AI models. On Wednesday, a group of more than 200 startups, called the Little Tech Association, sent a letter to Michael Kratsios, President Donald Trump’s science advisor, and US Commerce Secretary Howard Lutnick, lobbying against an outright ban on open-weight AI models. The group, which includes popular startup incubator YCombinator, has argued in favor of some safeguards but says denying Americans access to AI models abroad would dilute American startups and create a monopoly among AI giants.

Bill Gurley, legendary technology investor and longtime partner at Benchmark Capital, has publicly argued in favor of allowing the “free market to operate.” In a lengthy blog post offering a nice little history of open source software, Gurley writes that open-weight models avoid lock-in, encourage real academic research, and are essential for startups with limited capital.

“Every AI startup, every solo developer, every two-person team building a product on top of AI infrastructure, depends on having access to good, affordable models,” says Gurley.

Chamath Palihapitiya, one of All in “Deceiving the US government to protect the frontier labs’ business model using the Chinese bogeyman is wrong… It protects the shares of 5,000 people invested in OAI and Ant when everyone else sells. This would be a very stupid decision,” the X podcast hosts wrote. His colleague and fellow VC Jason Calacanis piled on. “Daddy Trump protects us!!!” he wrote on X, with an alarming number of crying and laughing emojis.

This position taken by some of Silicon Valley’s most ruthless capitalists may seem counterintuitive at first glance. Why do we allow foreign adversary technology to flourish in the United States? It’s as if the USA were only up 1-0 in the AI ​​World Cup, a slightly uncomfortable lead, and the crowd is cheering for the opposing team to get a free kick.