Nearly 200 Silicon Valley companies, including Y Combinator, argue a ban on Chinese open-weight AI would kill hundreds of startups. The White House says it's considering options.
Nearly 200 Silicon Valley companies, including Y Combinator and Proton, are pressing the Trump administration not to cut off access to Chinese open-weight AI models. A ban would cripple a generation of U.S. startups, they argue.
The newly formed Little Tech Association sent letters Wednesday to President Donald Trump, Commerce Secretary Howard Lutnick and Office of Science and Technology Policy Director Michael Kratsios. It is the first coordinated effort by the startup community to weigh in on whether Washington should restrict models from Chinese developers such as Moonshot AI and Alibaba.
"American leadership requires two things: world-leading American open-weight models and continued access for U.S. builders to open models already available worldwide," the founders wrote. Instead of broad prohibitions, they urged targeted safeguards.
Suhail Doshi, founder of AI infrastructure startup Particle and a member of the association, put it bluntly. "There'll be hundreds of companies that instantly die. It's great for Anthropic. We're all going to have to spend money on Anthropic."
The push follows reports that the administration was considering banning Chinese AI models after Moonshot AI released its Kimi K3 model. White House spokesperson Liz Huston said in a statement that "the Trump Administration is doubling down on innovation to widen the gap between America and the rest of the world." Another official, granted anonymity to discuss internal deliberations, called any reporting on a pending policy "baseless speculation."
Treasury Secretary Scott Bessent said Tuesday on Fox Business that the administration would investigate whether Chinese AI companies improperly distilled American models. The U.S. can "sanction" companies that engage in intellectual property theft, he said.
On Wednesday, Kratsios went further. He alleged that Moonshot AI built "a sophisticated internal platform" to conduct large-scale distillation of Anthropic's Fable model while developing K3, and that Moonshot had acquired Nvidia GB300-equipped servers despite a ban on their sale to Chinese entities. Moonshot has not publicly addressed the allegations.
Kratsios emphasized that the administration "strongly supports the free and fair development of AI, including a thriving competitive ecosystem that spans frontier models, specialized systems, open-source frameworks, and open-weight models." He drew a line between legitimate distillation and industrial-scale theft.
The Commerce Department, which maintains the Entities List for export controls, had not drafted plans to include Chinese AI companies as of Wednesday, according to a person familiar with the matter.
The debate exposes a growing divide inside the AI industry. Heavyweights like Anthropic push for tighter restrictions on security grounds. Startups say a ban would hand a competitive advantage to a handful of large U.S. AI companies while doing little to stop the spread of Chinese models abroad.
Little Tech Association Executive Director Harry Godfrey said policymakers should use "a scalpel rather than a sledgehammer." The goal, he said, is "the lightest-touch way that doesn't raise costs, limit access or inhibit American innovation while still addressing" legitimate security concerns.
Alibaba, whose open-weight models are among those at risk of restriction, trades under the ticker BABA. The company's stock has been sensitive to U.S.-China tech policy shifts. NVIDIA, whose chips are central to training these models, also faces export-control exposure.
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