Several former and current advisors to President Donald Trump publicly insulted leading American AI companies over the weekend because they could not agree on how to handle Kimi. David Sacks, the president’s AI and crypto chief until March, labelled Anthropic‘s models as “lobotomized” and “woke.” Emil Michael, a senior Pentagon official, described OpenAI’s new head of strategic futures as a “supreme village idiot.”
The conflict started with Kimi, a free, open-source model from the Chinese firm Moonshot that launched last week. It appears to match the intelligence of paid models from OpenAI and Anthropic.
Kimi and similar Chinese models create a genuine problem for Trump by splitting his top AI strategists into factions. Every time a new, capable, free model from China enters the market, US companies have less reason to pay for access to Anthropic or OpenAI. Since enthusiasm for these American firms drives a large share of economic growth, China’s models create both economic and political headaches for the president. They are “a threat for an administration that really doesn’t want more economic bad news,” Anton Leicht, a fellow at the Carnegie Endowment, wrote on X. They have already rattled US stocks.
What it means for makers
The practical effect is that creators no longer need to fork out money to access top-tier intelligence. If a user can run Kimi for free without restrictions, the financial incentive to subscribe to paid tiers from Western providers disappears. This directly impacts the revenue streams that currently fund the development of expensive, closed-source models.
Divisions in the White House
Trump faces a dilemma just a week after New York imposed the country’s first state ban on new data centers. Distrust of AI companies is growing, and many Americans would likely have little sympathy for OpenAI or Anthropic as they fight cheaper competitors. They would argue it is not the government’s job to protect their interests.
On this point, there is a small amount of agreement with David Sacks, who on July 19 criticized top AI companies that “want the government to eliminate their open source competition.” Sacks has also argued that Chinese AI models have become popular because they come with fewer restrictions on how people can use them, ignoring the built-in state censorship.
Sacks, however, has lost his job. He no longer holds a formal role advising Trump, and his view that more open AI is better has been largely replaced by a stance supporting greater government intervention. The logic behind this shift is that AI models have become strong enough to pose threats to national security, so the government must control their use.
This position has fuelled a new White House review process aimed at vetting AI models for security before release. Dean Ball, a former Trump AI advisor who now works for OpenAI, criticized it over the weekend as a “de facto licensing regime for frontier AI.” Ball predicted Trump might solve the Chinese open-source problem by using soft power to make US companies afraid to use models like Kimi.
That drew a response from Michael, who, with Secretary of Defense Pete Hegseth, has been the agency’s main liaison with AI companies. Michael called Ball the AI industry’s “supreme village idiot,” bristling at the suggestion that the government would quietly strong-arm companies rather than, as Michael put it, go through “the democratic process not some Deep State scheme.”
How Kimi got so good
Discussions have largely ignored how a model like Kimi achieved such quality. For much of the Biden administration and even the start of Trump’s second term, keeping China from obtaining top chips was a priority. Those export controls have loosened—Trump made the controversial decision to allow Nvidia to sell more chips to China, in exchange for the US government taking a cut—and the government has alleged that some chip smuggling has taken place.
China nonetheless has limited computing power, and it is not clear what chips the company behind Kimi used to train the model.
It is possible that the process involved some distillation, a practice in which AI models are trained on the outputs of existing AI models. OpenAI and Anthropic have long complained that Chinese AI companies do this and have requested government help to stop it. In April, they got it, when the Trump administration announced a series of efforts to curb the practice.
But Kimi is out there and free, and it is nearly as good as the Anthropic model the US government deemed so powerful that it was briefly shut down because it threatened national security. The weekend’s sparring suggests many in Trump’s orbit see that as a wake-up call. But nobody can agree on what for.
