July 24 2026
- Chinese AI models catching up to US frontier models
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Kimi K3 seems awesome
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Moonshot AI seems really good
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Michael Kratsios alleges distillation
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Reports that Trump White House might be divided on banning Chinese (or any) open source models
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Sacks predicted this in E275 - May 2026
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Any threat is used to take a shot at open source models
- Try to enter predicate facts into the public record to justify a push to ban these later on
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Sacks thinks it would be a tragic mistake for US government to ban open source
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If Anthropic was sincere about their distillation concerns, then they would push for a ban on Chinese models distilling American models, not to hurt American developers’ access to models
- Why aren’t they stopping it if its happening at “industrial scale”?
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Instead of KYCing their customers like Chamath suggested they are asking to ban their competitors
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Hilarious hypocrisy of these labs - especially Anthropic - when they have already paid fines for “distilling/learning” from books, internet, blogs, others’ code, etc
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Seems to be more of a valuation preservation game by the frontier labs - because it seems the models are getting commoditized faster than anticipated
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Seems value is more at the application layer and at infrastructure layer
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If US government intervenes, Chamath thinks it will tank the stock market
- Seems American enterprises will pay a token tax if they are forced into an AI duopoly - forced into an island of just 2 models
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If US bans open source that only applies here - rest of the world will run Chinese models for much cheaper and US will lose the AI race
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Distillation issue - are they taking copies of copyrighted software or are they looking at the output - looking at the output of a product and tuning your product in response is NOT copyright infringement
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The Chinese models are not - at least right now - being accused of stealing weights or software - so its not so pernicious
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OpenAI is saying the same thing - in the NYT case issue - they are taking NYTimes output and training their model - if Anthropic and OpenAI have a problem - they should enforce their terms of service
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Open source is responsible for the internet - AI can benefit the same way - the whole world economy will benefit
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The value capture is diffused
Chinese models doing great
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Its almost like the web browser in the 90s and how it won’t get commoditized
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Frontier models are growing exponentially and not being slowed down by the open source models
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Jason thinks their IPOs are going to get derailed
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Anthropic is being unseemly - most successful tech company in history - is racing to the government to protect themselves from their future competitors
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This is like flopping in the NBA
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China has 8x the electricity production and 20x the manufacturing capacity compared to US - by compressing knowledge/services economy which is US’s advantage they are commoditizing US’s advantage - creation/usage of bits gets commoditized and they are left with their advantage of creation/usage of molecules
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Most open source can do 95% of all tasks
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- Anthropic lawsuit settlement - $1.5B
- JCal taking victory lap (called it in 2023 and 2024)
- But the nuance here is they didn’t pay for even 1 book (that would have been fair use) - instead they apparently “stole” the content from libgen
- The hypocrisy here is they think its fair use to train their models and derive their own weights - even against the wishes of the authors - and they think the only content that should be protected is their own output
- They didn’t even claim initially that the Chinese companies were committing IP theft - they claimed a national security threat because those models don’t have guardrails
- If they do then they will lose all these court cases
- They might have made a fatal mistake by arguing that distillation is IP theft
- Hoisted by their own petard
- Google and Tesla earnings vs AI capex
- Google incredible earnings - Google Cloud doing very well but both Google and Tesla reported negative cash growth (first time for Google) so their prices dropped
- Google’s 20+ year average return on invested capital since going public is 32% - Chamath thinks they will do great
- The best thing that can happen to them is 500 different models proliferate and they work with all of them
- Google will spend 20% of US military budget in cash this year - Ryan Petersen tweet
- Google also own a good chunk of SpaceX and Anthropic
- GCP might be the best place to capture value from AI because of all the context/state they maintain about your business
- Should Apple get in on this game? They could buy a neo-cloud
- Socialism corner
- John Adams quote about how sacred private property rights - this is fundamental to the founding of America
- Private property rights are the foundation of liberty in America
- All anarchies end in tyranny
- Always starts with the framing as “you are bad” to the private property owner
- The other issue is that the problem is the delinquent tenants who are hurting the ability of the landlord to service the building - it affects the neighbors even more - old people who can’t afford to go anywhere, poor people are hurt
- Rich liberals can afford to have luxury beliefs about public spaces because they don’t live in those spaces
- If you want low rent, you need to have more units, if you want more units, you need faster permits
- In Argentina they got rid of rent control and rents went down
- Socialists never learn
- Now they want to ban credit and background checks on tenants and banning evictions - so what can the landlord do?
- So what incentive does the renter have if he’s not going to get evicted
- NYC already has 50000 ghost apartments
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