US startups fight proposed ban on Chinese open-weight AI

Nearly 200 American startups have formally asked the Trump administration not to block access to Chinese open-weight AI models. In letters to President Trump, Commerce Secretary Howard Lutnick, and White House science chief Michael Kratsios, the newly formed Little Tech Association warned that a broad ban would destroy the next generation of US companies. The signatories include prominent names like Y Combinator and the privacy firm Proton.

The plea exposes a deep rift in the AI industry. Anthropic and OpenAI have pushed for strict curbs on Chinese models, citing national security, but startups argue this would simply crush competition. “There’ll be hundreds of companies that instantly die,” said Suhail Doshi, founder of Particle. “It’s great for Anthropic. We’re all going to have to spend money on Anthropic.”

This American regulatory battle carries immediate consequences for European businesses. European developers rely on the same open-weight models to build applications without being locked into the expensive ecosystems of a few dominant US providers. If Washington effectively walls off Chinese AI, European companies will face the same inflated costs and reduced competition, limiting the continent's ability to build an independent tech sector.

The lobbying follows escalating tensions triggered by Moonshot’s Kimi K3, which outperformed Anthropic’s Fable 5 and OpenAI’s GPT-5.6 Sol on coding tests. Top officials have maintained aggressive rhetoric, with Treasury Secretary Scott Bessent threatening to sanction firms that steal American intellectual property. Kratsios alleged Moonshot distilled Anthropic’s Fable model and used banned Nvidia GB300 servers, prompting a Commerce Department inquiry into restricted US chips reaching China.

For now, a blanket prohibition remains unlikely. A White House official dismissed reports of an outright ban as “baseless speculation,” stating it was not seriously discussed. The Little Tech Association is instead pushing for targeted safeguards. “A scalpel rather than a sledgehammer,” said its executive director, Harry Godfrey, advocating for the lightest possible touch to address security risks. As Washington debates its approach, Chinese President Xi Jinping is already in Shanghai, pitching cheap, open AI to the rest of the world.