Kimi K3 & AI’s Price War, What Happened To Google?, OpenAI’s Partner Trouble

**Alex Kantrowitz** (0:00)
The walls are coming down for OpenAI and Anthropic as cheaper models and new open source competitors from China challenge their ability to make a profit. Google, meanwhile, delays its flagship model and seems to be spinning its wheels. And why can't OpenAI keep its partners from hating it? That's coming up on a Big Technology Podcast Friday edition right after this. In the face of ongoing disruption and opportunity, TMT leaders need to deliver tangible results, not just ideas. When pace and performance matter most, PwC combines market insights and deep sector experience with AI, cloud, and emerging tech to accelerate your transformation and drive measurable ROI, from strategy to execution. PwC can help you anticipate what's next, outpace disruption, and compete. For more information, visit pwc.com.

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**Alex Kantrowitz** (1:44)
Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced format. It's the Kimi K3 episode. We're going to talk all about this new challenger from China, a $2.8 trillion parameter model that is taking on the frontier and beating basically every model except for Fable. So we'll get into the implications of what happens after that and when they're a price war is really getting underway, especially now that Meta and SpaceX have released cheaper models. We're also going to talk about the state of Google, what's going on there. Why is their latest model delayed? And of course, OpenAI, we didn't even get to it last week. By the time we recorded, it was too early because just a few hours later Apple would announce they had sued OpenAI. So of course, today we'll talk about the lawsuit and more importantly, why OpenAI cannot hang on to its partners, at least not for long. Joining us, as always, on Fridays To Do It is Ranjan Roy of Margins. Ranjan, good to see you.

**Ranjan Roy** (2:42)
Happy Kimi K3 Day. Are you ready?

**Alex Kantrowitz** (2:45)
I sure am because this is a massive week, a potentially earth-shaking week in the AI story with the entry of Kimi K3 into the conversation. Let me just read the story from Bloomberg and then we can discuss it. Bloomberg says, China's powerful new AI surprises investors fueling a tech up. A surprise breakthrough from Chinese AI startup Moonshot rippled through global markets Friday, sending AI and semiconductor stocks sharply lower as investors drew parallels with last year's deep seek moment. The catalyst was Moonshot's new Kimi K3 model, which the company said rivals the strongest offerings from OpenAI and Anthropic. The launch was quickly dubbed the new Kimi moment. This is an interesting quote from Wei-Cern Ling, who is a managing director at Union Bainicare Privy. He said, people are worried that if US companies start using Chinese models more and Anthropic will invest less. That means US firms will lower the capex and in the end, the chip demand will be affected. So basically, here's the story.
OpenAI and Anthropic own the frontier, but there's a set of models that were effectively 10, 15 months behind them, that were basically jumping in and something that you could route like your lower intensity tasks to.
All of a sudden, Moonshot, which had basically released the very successful Kimi K2, comes out with this new massive 2.8 trillion parameter model, Kimi K3. And it is right there with GPT-56 Sol and Opus 4.8 on almost all the benchmarks. In fact, it even beats Kimi K3 on something called Program Bench.
It beats Fable 5 on Program Bench. It beats Fable 5 on SWE Marathon. And it's right there in league with all the other top models on all of the benchmarks we look to to assess model quality. It's a big moment because it seems to show that China's open-source movement is not the 10 or 15 months behind US AI, but maybe 4 or 5 months at the most, maybe even less than that. And when that happens, your rationale for going with the closed more expensive model as opposed to one of these open-source models gets less and less. And you start to wonder, is there actually a benefit in building frontier intelligence if you're going to be equaled this quickly? So that is my outlook on it. Ranjan, what do you think about this?