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OpenAI is scared of open-weight models. Should the US be?
12:33 PM PDT · July 20, 2026
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The impressive capabilities of Chinese lab Moonshot’s Kimi K3, the biggest open-weight large language model, has kicked off a debate that conflates two things: the economic possibilities of American AI giants and the future of LLMs as a technology.
OpenAI’s head of strategic futures, Dean W. Ball, went so far as to argue that the US government should find a pretext to create regulatory fear, uncertainty, and distrust around the new models, since open-weight models must necessarily deter capital spending by the frontier labs.
People freaked out, with tech luminaries like Yann LeCun and Martin Casado arguing that open software can accelerate innovation and coexist with proprietary projects. Ball soon retracted his claims that a regulatory crackdown was the White House’s “best strategy” and that open-weight models necessarily slow down advances in the technology.
However, Axios reports that the Trump administration is considering banning K3 and other advanced Chinese models at the behest of American frontier labs. Another report from Politico said that the Department of Commerce would not take that step anytime soon.
The benefit for major AI companies is clear: Open-weight models, running on independent infrastructure or inside major enterprises, offers cheaper intelligence than Anthropic or OpenAI’s class-leading models. If users increasingly spend more outside the closed labs, that means smaller return on their massive investments in model training.
That view extends far beyond OpenAI. “Strong, frontier-caliber open source models will place a squeeze on the margins and will bring down the prices of the frontier companies,” Braden Hancock, the co-founder of Snorkel AI and a research partner at the Laude Institute, told TechCrunch. “It will not necessarily mean that the amount of AI usage goes down a little bit. You know, obviously, quite the opposite.”
That’s not a problem for people without shares in Anthropic and OpenAI. AI will still proliferate. So what’s the justification for the government to block Americans from purchasing something in our ostensibly free markets?
Concerns over Chinese models come in several flavors. One is protecting US data from the Chinese government; the US banned the import of modern Chinese EVs over concerns about their data gathering. But experts tend to think that open-weight models run on US servers are unlikely to leak data back to China, although it’s not impossible that such a thing could be done.
Another is that the models may have implicit bias toward the PRC — but it’s not clear what that might mean for, say, coding tasks.
A third common worry is that Chinese models lack the guardrails that the US government has mandated ( through an opaque process), which aim to prevent leading US LLMs from being used to exploit closed computer systems or create weapons. However, those same guardrails may make US companies more vulnerable: David Sacks, the venture capitalist and Trump adviser, has been sharing cases of US companies turning to Chinese LLMs to close security gaps when US frontier models refuse to do the tasks.
But the most significant motivation for restricting the models is that fear that China will be able to outpace the US if the frontier labs slow down.
Sam Bresnick, a China-focused research fellow at Georgetown’s Center for Security and Emerging Technology, says the growing importance of AI to the US military operations gives the US a reason to support continued investment in AI at the frontier labs. But the whole question, he says, is fraught.
“Why should the weight of the U.S. government be aimed at protecting these these companies from competitors that are being locked out from the U.S. market based on their origins?” Bresnick asks.
Advocates for open AI say that the frontier companies are creating a false binary between innovation and closed models.
“The bigger impact of having these open source models come from China is less that they’re sneaking in back doors, and more that they are owning the innovation,” Hancock told TechCrunch. “You end up with, effectively, an expanded workforce on your model. PyTorch became the industry standard because it was open source, and so the whole community could contribute to it rather than just one company, and it grew and grew, and all the rest of the deep learning libraries kind of died in comparison.”
Hancock and other advocates fear that Chinese LLMs will become the locus of international research. Already, US graduate programs mainly build on open-weight Chinese models, and Hancock says that half of the papers students study are coming from Chinese institutions, with American frontier labs increasingly reticent about sharing their work widely.
“Restricting open models wouldn’t make AI safer,” said Clem Delangue, the CEO of Hugging Face, a platform for open AI collaboration. “It would simply hide the risks, concentrate power in the hands of a few and make it harder for the next generation of builders, researchers, academia, non-profits, governments to participate in making AI safer and more beneficial for all.”
Bresnick says that the real way to slow China would be to focus more on chip export controls. A better way to preserve US AI leadership would be to stop selling Nvidia H200 processors to China. “That,” he says, “could potentially keep us out of this thorny debate about banning open source technologies that huge numbers of US companies want to use.”
Part of the problem is that uncertainty around AI economics. “The open business model, the proprietary business model — neither one is figured out. AI companies are struggling to figure out how to make money on their tools, especially as training costs need to go up and up,” Bresnick points out.
The same challenges that play out in the US are also playing out in China, where AI companies are also struggling to generate revenue and access compute power, and the government is seen as encouraging open releases for policy reasons despite the challenge in capitalizing on them.
Some US companies, including Thinking Machines Lab and Nvidia, are trying to make a business around releasing open models. Hancock points out that Nvidia would do better “if there are dozens or hundreds of companies building AI than rather than two or three that are well capitalized enough to make their own chips,” which is one reason behind its investment in Nemotron, a collection of open models.
“The main point is the U.S. would be very well served to have its own very capable, much less expensive open models,” Bresnick said. “It just clashes with the approach the frontier labs have taken.”
With additional reporting from Rebecca Bellan.
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Tim Fernholz
Senior Reporter
Tim Fernholz is a journalist who writes about technology, finance and public policy. He has closely covered the rise of the private space industry and is the author of Rocket Billionaires: Elon Musk, Jeff Bezos and the New Space Race. Formerly, he was a senior reporter at Quartz, the global business news site, for more than a decade, and began his career as a political reporter in Washington, D.C.
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Trump’s latest AI czar has already resigned
3:21 PM PDT · July 20, 2026
Chris Fall, the director of the Center for AI Standards and Innovation (CAISI), has resigned, the agency confirmed to multiple news outlets.
He was appointed just three months ago after the last appointee, Collin Burns, left in less than a week, The Washington Post reported at the time. Burns was reportedly “pushed out” of the job in April because he previously worked for Anthropic and the Trump administration had been battling with the company, sources told the Post.
No reason was given for Fall’s departure. Prior to leading CAISI, Fall was the director of the Department of Energy’s Office of Science during the first Trump administration and had been the acting director of the DOE’s Advanced Research Projects Agency-Energy. He worked in the DOE’s Office of Naval Research (ONR) prior to that.
Before Burns and Fall, the agency was led by venture capitalist David Sacks, whose title at the time was White House AI and crypto czar. Sacks stepped down in March.
CAISI, which operates under the National Institute of Standards and Technology, is the primary organization for developing technical standards and testing methods for AI models as well as assessing cybersecurity risks. Yet it was not the agency at the center of the most recent model-risk brouhaha.
That occurred in June when the U.S. Commerce Department invoked an obscure export control directive that effectively forced Anthropic to pull its Mythos and Fable models from the market. The ban was lifted by the end of the month, when Secretary of Commerce Howard Lutnick said he was satisfied with Anthropic’s safety plans.
Earlier this month, the White House also signed an executive order for a new AI safety oversight program called “Gold Eagle” that creates a clearinghouse for cybersecurity vulnerability coordination. A host of federal organizations were named as part of the program, including the Commerce Department and Department of Homeland Security. But, as CNBC pointed out, CAISI was not among the federal organizations mentioned.
Meanwhile, after Anthropic’s models were freed from the ban, Google DeepMind CEO Demis Hassabis began calling for the creation of an independent, industry-run standards body to regulate frontier AI modeled after FINRA — the same sort of mission that CAISI was formed to tackle.
Fall’s resignation also follows this weekend’s handwringing over Chinese AI lab Moonshot’s new version of its open model Kimi, which performed competitively against flagship frontier models. The administration was weighing efforts to somehow ban Chinese open models, Axios reported. This sparked immediate debate and outrage over the weekend, including from Sacks, who argued that regulations shouldn’t be used as a protectionism strategy for U.S. proprietary AI labs.
While CAISI has released a few reports on the capabilities of Chinese open-weight models Z.ai’s GLM-5.2 and DeepSeek V4 Pro, it hasn’t talked much about its processes for testing. (Open weight means these models can be publicly downloaded and run locally, but its training code and datasets are not available). Since July 9, TechCrunch has sent multiple inquiries to both the DoC and NIST about how its LLM evaluations work and has not received a response.
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AI, ai czar, Government & Policy, TC
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Julie Bort
Venture Editor
Julie Bort is the Startups/Venture Desk editor for TechCrunch.
You can contact or verify outreach from Julie by emailing julie.bort@techcrunch.com or via @Julie188 on X.
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