The Week: China Is Undercutting America’s AI Boom

**SPEAKER_1** (0:01)
Support for the show comes from MongoDB. AI-assisted and agentic coding is helping you build faster than ever. But if your data layer is a bottleneck, what's the point?
Instead of wrestling with rigid schemas or translating data formats, MongoDB's native data model mirrors the language LLMs already speak. It ships at the speed of AI, is ACID compliant, and scales to handle massive Fortune 500 workloads. Ask any developer, it's a great database. Start building at mongodb.com/ai.

**Ryan Reynolds** (0:36)
Hey, it's Ryan Reynolds here for Mint Mobile. Now, I was looking for fun ways to tell you that Mint's offer of unlimited premium wireless for $15 a month is back. So I thought it would be fun if we made $15 bills, but it turns out that's very illegal.
So there goes my big idea for the commercial. Give it a try at mintmobile.com/switch.

**SPEAKER_3** (0:57)
Up from payment of $45 for 3 months, $90 for 6 months or $180 for 12 month plan required. $15 per month equivalent, taxes and fees extra. Initial plan term only greater than 50 gigabytes may slow when network is busy. See terms.

**SPEAKER_4** (1:07)
This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus.

**George Hahn** (1:32)
Welcome to the week from Prof G Media, where we break down what mattered and what it all means. I'm George Hahn and it's Friday, July 24th. Today, China is challenging America's AI dominance with cheaper models and a better global reputation. Then, the debt piling up beneath the AI boom. And finally, how the casino economy is turning young men into monks.
Let's get into it.
Last Thursday, a Chinese startup Moonshot AI released a model named Kimi K3, the largest open weight model ever built. On some benchmarks, it outperforms the best models from open AI and Anthropic. It also runs at about a third of Anthropic's price. On Monday's Prof G Markets episode, Scott argued that Kimi is part of a much bigger threat to America's AI industry.

**SPEAKER_1** (2:35)
Well, I think the biggest story that's got almost no coverage, is that, is what I think is what I would refer to affectionately is AI dumping from China. And that is free Chinese models went from less than a third of all traffic in late 2025 to about two-thirds recently. And it's much less expensive. I mean, essentially what's happening in the AI market has condensed what's happened to industrial economies in Europe. But instead of it taking two decades, it's taken two months. And that is they steal the IP on a cell phone tower from Siemens, and then they manufacture it with cheaper labor, and they sell it back to Telcos for 40 cents on the dollar.
And there are a lot of regional LLMs in China, and they have access to cheaper power, cheaper chips, less power consumptive, and they're also subsidized by their own local governments. And I believe, and I said this before, that she has a vested interest that the ultimate Ohio-class submarine to be flipped against us is to engage in AI dumping. And I think it's happening. And you hear stories of VCs encouraging the portfolio companies to use these open-way Chinese models. But you're seeing the best business model in history is IP theft. A close second in terms of a pricing mechanism is 80% of the market leader for half the price. And deep-seeking these Chinese open-way models claim they're 90% of the market leader for a third of the price.
I think this is going to be the next geopolitical pawn once Trump actually figures out what's going on here quickly enough.

**George Hahn** (4:10)
Ed's read is that an AI price war has already begun, and that America's leading labs are fighting it with money they don't actually have.

**Scott Galloway** (4:20)
I think the most significant and the most important is the price war that appears to be breaking out right now. And that is the pricing of these AI models is clearly becoming front of mind for enterprises, and it is very quickly becoming a race to the bottom. Because you have Meta that is coming out with their model, which is dramatically cheaper, and they have literally stated that it is their mission to initiate a price war, because they know that they can play that game. They have the cash. OpenAI and Anthropic can only play that game for so long, because where are they getting their money from? They're not getting it from profits. They're getting it from venture capital. And so at some point, if the investor spigot turns off, they can no longer play that game. Gemini is also pricing their models lower, but the elephant in the room, and I'm 100% in agreement with you on this, is clearly the Chinese models. It is clearly DeepSeek, Kimi. All of these Chinese models, which are so dramatically cheaper than the US models that it's hard to actually fathom. Just to go through the data here, the price per million output tokens for OpenAI's model, DPT 5.6, is $45. For Claude Fabel 5, it's $50.