Hello, I’m Blake Montgomery, writing to you after a double-header feature of Christopher Nolan’s The Odyssey and the World Cup final. What a great Sunday. Today in tech, we’re discussing how China is chipping away at the US’s lead in the AI race and how Silicon Valley’s workers are taking action to protect their jobs from AI.
As Google falters on AI, China eats into the US’s lead
Google is struggling with the latest version of its Gemini model
A Chinese company, Moonshot, put out a free, surprisingly capable model last week
China’s new models yet again thrown the US dominance in AI into question
Google is months behind in its launch schedule for the new version of its flagship AI model, Gemini 3.5. According to Bloomberg, Google is attempting to improve Gemini’s coding abilities to catch up to Claude, the Anthropic bot that is widely considered the best AI coding tool. OpenAI released a new model at the start of July; Google had been expected to do the same in May. News of the delay sent Google’s shares sliding as investors questioned whether it could maintain its top position in the AI race.
A refreshed and newly capable Gemini might also have ameliorated the damage to the US’s reputation as the leader in AI this week – but didn’t.
As Google’s internal struggles became public, the Chinese startup Moonshot debuted an unexpectedly strong model, sending shivers through Silicon Valley and Washington DC alike. Moonshot’s Kimi K3 model featured surprisingly capable coding, particularly in a niche called “front-end coding”. “This may be the single biggest release of the year,” Anastasios Angelopoulos, the CEO of AI testing company Arena, said.
By Sunday night, Moonshot couldn’t keep up with the demand for its latest model. “Kimi K3 has received far more love than we expected, and our GPUs are feeling it. Over the past 48 hours, demand has pushed close to the limits of our current capacity,” the company posted on X.
Unlike ChatGPT, Claude and Gemini, Kimi K3 is free to use and open-weight, meaning anyone can download it and run it locally on their own computers, as its core components are released to the public.
It’s been the general strategy of Chinese AI companies: open-source and open-weight models, beating US AI companies on price as Chinese manufacturers do, and mirroring the broader trade war of the US and China. DeepSeek inspired a major US market panic last year. Alibaba previewed its latest model, Qwen3.8 Max, on Sunday, showing off a similar number of parameters as Kimi K3. The company plans to publish the model’s weights soon, per Bloomberg.
The strategy has been made possible by Beijing, which subsidizes computing resources and power consumption for its domestic AI startups, allowing them to release their AI models for free. The basic logic goes that if these startups can’t compete on capability with US models, they can compete on cost and undercut the US parent companies, which need to earn a…
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