GoKawiilChina's open-weights AI strategy is winning: its companies are taking the lead. America's closed-first, locked-down strategy is doomed to failure - and it could take the US economy down with it.
Link: China delivers a one-two punch to America’s AI dominance, by Robert Hart in The Verge
AI models, as a product in themselves, have very little moat beyond what amounts to brand loyalty and superficial switching costs. Instead, the moat is in the enterprise services that sit around them: the deals and contracts, connectivity with enterprise systems, and quality of life features in an enterprise context.
If we consider the models themselves, it’s easy to switch between them: someone could be using ChatGPT today and Claude tomorrow, with very little impact on their workflows. This is particularly true in the engineering world, where models are accessed via API: you can swap out the API and use the same prompt.
Those companies can make deals to lock their customers in, but in practice there’s very little long-term technical incentive to use one vendor over another. You pick the best model for your needs and change models and vendors if another one becomes better.
The US government has placed export controls on GPUs. There are also strong regulations that (reasonably) prevent sharing certain kinds of data with Chinese servers. The result is that while Chinese companies have enough compute to train models, they can’t really provide the kinds of global-scale centralized services that we see from OpenAI and Anthropic — at least, not in the same way.
And open almost always wins when it comes to infrastructure adoption. Open technologies can be used permissionlessly and therefore can be at the center of more innovation. You can host them where you want, experiment with them, alter them, and tweak to fit your use case. Open weights models are not open source, but they are portable and permissionless.
With all this in mind, it makes sense for China to release its AI models openly. It turns a US-created compute disadvantage into a distribution advantage; it commoditizes the layer where American companies make money; and it creates a far more effective global ecosystem than could be established through locked-in, centralized services. It’s obvious to me that there are ecosystem benefits throughout China, from manufacturing to scientific research; every sector can just plug in these models.
The saving grace for American companies has been that US frontier models have outperformed open ones. That gap is now closing:
“Moonshot and Alibaba unveiled models they claim can go toe-to-toe with the best from OpenAI and Anthropic at a fraction of the cost. The rapid-fire releases suggest America’s lead at the AI frontier is increasingly tight, just as the technology is becoming central to national security, economic power, and geopolitical influence.”
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