Download: How China’s AI Divide is Impacting the White House and Generating Record Royalties

It all began with the controversy surrounding Kimi, a free, open-source AI model launched recently by the Chinese company Moonshot. This model showcases capabilities comparable to those of premium offerings from OpenAI and Anthropic, which require hefty subscriptions.

<p>With every new free AI model emerging from China, American companies have less incentive to invest in the costly models offered by Anthropic or OpenAI. This trend poses significant economic and political challenges for the current administration, leading to divisions among top AI strategists in the president's circle.</p>

<p>Read the full story to uncover the reasons behind the ongoing debate over Kimi.</p>

<p><em>—James O'Donnell</em></p>

<p><strong>This</strong> <strong>article</strong> <strong>is from our weekly AI newsletter, The Algorithm.</strong> <a href="https://forms.technologyreview.com/newsletters/ai-demystified-the-algorithm/?utm_source=the_download&amp;utm_medium=email&amp;utm_campaign=the_download.unpaid.engagement&amp;utm_term=*%7CSUBCLASS%7C*&amp;utm_content=*%7CDATE:m-d-Y%7C*"><strong>Sign up</strong></a><strong> for delivery every Monday.</strong></p>

<p class="has-medium-font-size"><strong>Must-Read Content</strong></p>

<p><em>We've combed through the internet to find the most entertaining, important, and thought-provoking technology stories for you today.</em></p>

<p><strong>1. Anthropic's Record $1.5 Billion Copyright Settlement Approved</strong><br/>The plaintiffs claimed Anthropic used unauthorized works to train Claude. (<a href="https://www.reuters.com/world/us-judge-approves-anthropics-15-billion-settlement-copyright-lawsuit-2026-07-20/">Reuters</a> $)<br/><em>+ This secures the largest known copyright payout in history.</em> (<a href="https://www.engadget.com/2219475/judge-approves-anthropic-1-5-billion-settlement-authors/">Engadget</a>)<br/><em>+ However, many creators still question this outcome as a victory.</em> (<a href="https://techcrunch.com/2026/07/20/anthropics-landmark-1-5b-copyright-settlement-is-approved/">TechCrunch</a>)<br/><em>+ AI copyright concerns may stifle creativity.</em> (MIT Technology Review)<br/><br/>

<strong>2. Trump Administration Mulls Ban on Chinese AI Models</strong><br/>With the launch of Kimi K3, renewed calls for restrictions are rising. (<a href="https://www.axios.com/2026/07/20/ai-us-china-open-source-kimi">Axios</a>)<br/><em>+ Officials remain divided on the proposed ban.</em> (<a href="https://www.fastcompany.com/91576757/trumps-proposed-ban-on-chinese-ai-models-could-strengthen-beijings-hand">Fast Company</a>)<br/><em>+ China's open-source strategy appears to yield results.</em> (MIT Technology Review)<br/><br/>

<strong>3. China Considers Tightening Export Restrictions on AI Models and Chips</strong><br/>The aim is to prevent Western nations from acquiring their technology and startups. (<a href="https://www.ft.com/content/6049a031-9e9b-464c-97bb-414da04d5a6a?syn-25a6b1a6=1">F.T.</a> $)<br/><em>+ The Chinese government is consulting with tech firms regarding potential restrictions.</em> (<a href="https://www.reuters.com/world/asia-pacific/china-considers-tighter-export-controls-ai-models-chips-ft-reports-2026-07-21/">Reuters</a>)<br/><br/>

<strong>4. President Trump's AI Safety Chief Resigns After Just 3 Months</strong><br/>Chris Fall has led CAISI, the federal AI safety institute, since April. (<a href="https://www.axios.com/2026/07/20/trump-ai-security-agency-head-resigns">Axios</a>)<br/><em>+ The reasons for his departure remain undisclosed.</em><a href="https://www.cnbc.com/amp/2026/07/20/trumps-head-of-ai-safety-agency-caisi-resigns-after-months-on-job.html">CNBC</a>)<br/><br/>

<strong>5. Google Develops New Chips for Efficient Gemini Model Performance</strong><br/>The chip, named Frozen V2, is projected to launch in 2028. (<a href="https://www.theinformation.com/articles/google-plans-new-frozen-chip-run-ai-models-efficiently">Information</a> $)<br/><em>+ Alphabet's stock was mentioned in the report.</em> (<a href="https://www.cnbc.com/2026/07/20/alphabet-googl-stock-ai-chip-report.html">CNBC</a>)<br/><br/>

<strong>6. New Orleans Police Explore Equipping Drones with Weapons</strong><br/>The draft drone manual sets the stage for weaponized quadcopters. (<a href="https://www.404media.co/new-orleans-cops-published-policy-document-allowing-weaponized-drones/">404 Media</a>)<br/><em>+ Drones may soon track shoplifters.</em> (MIT Technology Review)<br/><br/>

<strong>7. EU Imposes Record Fine on AliExpress for Selling Dangerous Products</strong><br/>The €550 million fine is the largest under the Digital Services Act. (<a href="https://www.bbc.com/news/articles/cp8714286dpo">BBC</a>)<br/><em>+ Alibaba plans to appeal the fine.</em> (<a href="https://www.scmp.com/tech/policy/article/3361255/alibaba-vows-appeal-us629m-eu-fine-breaches-digital-services-act?utm_source=feedly_feed">SCMP</a>)<br/><br/>

<strong>8. AI Chatbot Election Advice Found 'Inaccurate and Unreliable'</strong><br/>So concluded tests conducted in Hungary earlier this year. (<a href="https://www.theguardian.com/technology/2026/jul/21/election-voting-advice-ai-chatbots-inaccurate-unreliable-hungary">The Guardian</a>)<br/><br/>

<strong>9. Red Light Therapy Shows Promise for Healing and Healthy Aging</strong><br/>It may also enhance skin health and mitigate vision loss. (<a href="https://www.economist.com/science-and-technology/2026/07/20/the-surprising-benefits-of-red-light">The Economist</a> $)<br/><br/>

<strong>10. Neill Blomkamp's AI-Generated Horror Clips Elicit Mixed Reactions</strong><br/>The acclaimed director aims to produce a feature film in this experimental format. (<a href="https://gizmodo.com/neill-blomkamps-new-horror-clip-is-entirely-ai-generated-sucks-2000788103">Gizmodo</a>)</p>