The Briefing

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How protectionist is the Trump administration? Sure, President Donald Trump loves tariffs. But does he really want to drive up AI costs for U.S. business by banning Chinese open-source AI? Chatter about that is growing in the wake of a story we published on Saturday, which revealed that the administration had discussed the idea of banning open source last year.

Axios, meanwhile, reported on Monday that last week’s release of Kimi 3 from Chinese firm Moonshot had stoked conversations about banning foreign open source AI (more on the new Kimi model). A ban would set off an uproar. More and more companies are finding that ever-advancing Chinese models—such as the one from Moonshot released last week—are a good way to control their AI spending.

Chinese models have accounted for 30% of tokens used by U.S. firms since February, according to a report from Wall Street firm William Blair published on Monday, citing OpenRouter data. And in some cases, companies have found Chinese models can do things the top U.S. models can’t do, thanks to guardrails imposed on U.S. technology, as former White House AI czar David Sacks noted in an X post Sunday night.

In a separate X post, Sacks said the guardrails put on American models are “only making ourselves less competitive.” On Monday, investors Chamath Palihapitiya and Bill Gurley both warned of the damage to U.S. companies of banning Chinese open-source AI. As Palihapitiya put it, forcing U.S. companies to spend “50-100X more than their competitors abroad” on American tech will make for “financially impaired” American companies, which will eventually lead to problems for the AI labs.

Hopefully Trump can be persuaded not to go down this route—although given his stance on tariffs, never say never.

The Ellisons’ Bad Day

Spare a thought for Larry Ellison and his son David. Their main source of wealth, Oracle, is on the outs on Wall Street. Shares of the software and cloud firm fell 4% on Monday to $121.38, its lowest point since April of last year, amid growing worries about Oracle’s expensive AI data center expansion. (On Saturday, The Information detailed some of the multibillion-dollar cost surprises the company was encountering in the expansion.)

Then on Monday, a judge blocked the Ellisons’ Paramount Skydance from completing its $110 billion purchase of Warner Bros. Discovery for 14 days. Closing of the deal had appeared imminent: Paramount had received a spate of regulatory approvals from countries around the world.

The U.S. government had already signed off on the deal, but a bunch of states went to court to block it. And Monday’s ruling, by the judge hearing the case, suggests the states have a decent chance of winning.

That would be disastrous for Paramount. It’s already paying a high price for WBD—Netflix abandoned a previously arranged purchase of half of WBD rather than try to match Paramount’s offer. If the court case delays Paramount’s completion of the purchase after Sept. 30, Paramount has to pay a fee of $650 million for every quarter the closing is delayed.

And if regulators kill the deal, Paramount will have to pay a $7 billion termination fee to WBD. That’s on top of the $2.8 billion it paid earlier this year to break up the WBD-Netflix deal. So you can imagine a scenario where the current deal falls apart and Paramount is out roughly $10 billion.

Paramount shares fell 2% to $8.57 today. That’s well below the $12 to $16.02 price at which a group of investors is putting in new equity to help fund the WBD purchase. The Ellisons’ investment in Paramount is suddenly looking a lot less promising.

In Other News

• Chris Fall, director of the Commerce Department’s Center for AI Standards and Innovation, is resigning after just three months on the job, a Commerce Department spokesperson confirmed. Dr. Arvind Raman, director of the National Institute of Standards and Technology, which houses CAISI, will serve as acting director, the spokesperson added.

• Chinese startup Moonshot AI, whose powerful new open-source model is upending Silicon Valley, is seeking formal approval from investors to begin preparations for an IPO in Hong Kong, according to two people with knowledge of the matter.

• Alphabet stock jumped 3% on Monday morning after The Information reported that Google was working on a new chip that could be 6 to 10 times more efficient than its current line of homegrown AI chips.

Today on The Information’s TITV

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