A new Chinese AI model claims to outperform GPT-5 and Sonnet 4.5 – and it’s free
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Credit: Moonshot
(Disclosure: Ziff Davis, ZDNET’s parent company, filed an April 2025 lawsuit against OpenAI, alleging it infringed Ziff Davis copyrights in training and operating its AI systems.)
Until now, the general sales pitch across Silicon Valley has been that it’s worthwhile to pay for proprietary AI tools from a leading developer, since — to paraphrase what’s become a popular marketing trope — even if AI doesn’t put you out of business, another company using AI almost certainly will (never mind the fact that the vast majority of businesses using AI haven’t seen any measurable ROI).
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Similar to DeepSeek’s R1, the arrival of Moonshot’s new model throws the entire logic of that sales pitch into question. Suddenly, businesses have at their disposal a free AI model that’s supposedly better at performing critical agentic tasks than the best proprietary models available.
Of course, it’s highly unlikely that legions of businesses are going to throw the AI baby out with the bathwater and immediately cancel their OpenAI or Anthropic enterprise subscriptions just because the latest hotshot Chinese firm claims to have built a more advanced model. But it’ll certainly turn some heads and get people wondering again: Maybe the proprietary, subscription-based model of AI they’ve been sold isn’t the only way of the future.
In fact, it’s already happening: Some US companies like Airbnb now prefer AI tools from Chinese companies over those from their American counterparts, citing both their better performance across some critical tasks as well as their lower cost. Of course, some experts have expressed concern that open-source models, especially with foreign origins, pose an added security risk; several US agencies and other countries swiftly banned DeepSeek.
AI faceoff: US vs. China
If the January arrival of R1 was that country’s “Sputnik Moment,” then Thursday’s debut of Moonshot’s Kimi K2 Model is the Chinese AI industry’s moon landing (pun intended).
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American policymakers and tech pundits have commonly framed that race as an ideological one, with “American AI” on one side supposedly encapsulating the ideals of Western liberal democracy and “Chinese AI” on the other, representing centralized control over the flow and censorship of information.
While it’s true that some AI models built by Chinese labs exhibit biases and censor information that seem to align with the official policies of the Chinese Communist Party, it’s important to bear in mind that all AI systems — regardless of where their parent companies are based — come with some kind of bias; the technology you use will to some degree reflect the worldview of the people who built it and the bias embedded in the data used to train it.
In any event, ideological concerns may take a backseat to financial ones if the new Kimi model’s performance holds up to the impressive metrics on Moonshot’s website. No investor can overlook that paltry $4.6 million pricetag.
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Here in the US, while businesses and individual consumers have been sold the idea that it’s worth paying for a top-tier proprietary model, investors have been sold the story that in order to build those tools, companies need to spend enormous sums of money, well into the tens of billions of dollars, even though many of those companies aren’t yet profitable.
So far, it’s been working. Leading US AI labs like OpenAI and Anthropic are now valued in the hundreds of billions, and their spending on the infrastructure and compute required to build increasingly advanced models has been ramping up by the day. But fears have been growing around the prospect of an AI bubble: the possibility that a large segment of our global economy has been inextricably tied up with a commodity that, in the end, might not be able to generate a profit, and which could send the whole house of cards toppling down, like the widespread use of securitized derivatives did to the housing market in 2008.
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Only time will tell if we’re actually living inside an AI bubble. But one thing is certain: The sudden arrival of a free tool that outperforms leading models from OpenAI and Anthropic is going to make many tech investors’ eyes water — and wonder if they ought to be backing a different horse.
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- Source: https://www.zdnet.com/article/a-new-chinese-ai-model-claims-to-outperform-gpt-5-and-sonnet-4-5-and-its-free/