Nvidia, Microsoft, SpaceX Launch AI Safety Initiative After Cyber Attack

Nvidia led a group of tech companies Monday in announcing a new AI safety initiative focused on open models, days after a cyber attack on startup Hugging Force exposed defense gaps in today's frontier systems.

The attack forced Hugging Face to use a self-hosted, open-weight Chinese model because leading U.S. frontier models – bound by guardrails that could not distinguish aggressor from defender – were not available for self-defense, the company said.

Treasury Secretary Scott Bessent last week threatened sanctions on Chinese companies that carry out "distillation" attacks, where one model extracts knowledge from a better-trained rival model. The threat came as lawmakers weigh how to limit access to Chinese AI models, most of which are open weight and freely downloadable.

"There is a real possibility the US government does impose restrictions on Chinese models," Chris McGuire, senior fellow for China and emerging technologies at the Council on Foreign Relations, told CNBC. That could include a ban on transactions involving the models, such as purchasing tokens through an API or U.S. companies hosting the model on the cloud and charging for inference, he said.

McGuire said the debate in Washington is not about open-source versus closed-source. "It is a debate about whether or not to tolerate Chinese IP theft," he said. "Any actions would be focused on Chinese companies, not the open-source ecosystem."

The new alliance, called the Open Secure AI Alliance, will develop and share open tools for cybersecurity. Alongside Nvidia, members include Microsoft, SpaceX, Palantir, and dozens of other companies from the U.S. and Europe.

The initiative comes as the same companies push back against potential restrictions. Last week, Nvidia, Microsoft, Meta, Palantir and more than 20 other companies released a letter asking policymakers to avoid "premature restrictions" on open-weight AI models that would "stifle competition or drive innovation overseas."

Nvidia said the Hugging Face incident showed a "practical truth." "When defenders cannot inspect, adapt and run advanced AI on their own infrastructure, their ability to respond is constrained at exactly the moment speed matters most," the company said in a statement.

Nvidia shares fell 0.92% to $206.84, giving the stock an Alpha Score of 74 (Moderate). Microsoft shares inched up 0.03% to $381.70, with an Alpha Score of 60 (Moderate).