Regardless of whether they achieved parity via distillation, or whether they got here via independently constructing a model from scratch, it was always going to end this way for the frontier American labs. Distillation “attacks” are not attacks. The frontier labs “distilled” all existing human written knowledge into their models, there was always going to be a second class lab that would distill that model into a cheaper version of it. There was never any plausible explanation for why this wouldn’t happen. There was never any practical mechanism to prevent someone from saving a conversation and using it to train their own model.
Even if it didn’t happen here, it was still the case that it was going to happen going forward. It was always going to end like this. Invest in the hardware companies, not the model companies.
Almost all markets depend on some form of regulation whether its as simple as "leave everyone alone but no stealing" or "every participant has to source every object through mountains of red tape."
Thus far the US has not really chosen to go the Chinese rare-earth method yet. The problem with distillation attacks is the end result is everyone who is not doing them is going to deal with some kind of regulation whether it's complete loss of access, or the amount of control you'll have to give up to access them will be ridiculous.
Sort of like the "stealing music is fine" but "lets freak out now that it's producing visual art", in the end the entire thing is a social construct. Whether this is treated as theft or "business as usual" is entirely societal.
Eventually the gap will close, unless there's a major breakthrough that hasn't been made yet.
Given these models could not have been trained in the first place if they had to license every line of random fan fiction on the internet, I think distillation also being fair game is a tradeoff everyone should be willing to take (unless they want to decelerate, but that's a different conversation).
How is distillation an "attack" but gigascraping the Internet to the point of crashing servers and everyone needs Cloudflare and Anubis now not an "attack"?
I'm not aiming for a what about kickflip here: I'm saying we need to either agree on some rules or stop crying foul. Maybe the coherent legal theory is that neural networks and intellectual property don't interact. That would be weird but it would be consistent, a market could price it, I could do coding stuff and know if I was illegaling.
But this weird gerrymander that no judge will really rule on in an emphatic way is like, bad for the planet, bad for markets, bad business.
There are a lot of reasons to look forward to DeepSeek Huggingface drop kicking the unambiguous frontier weights in like, November, but I think my favorite one will be "who's distilling now bitch?"
I think you've basically got the legal theory. Training a neural network isn't prohibited by copyright law so if you can legally get your hands on something (e.g. by sending a GET request to someone with rights to serve the contents of their web page, or by buying a book) without signing a contract to not train on it, you can train on it.
But the American AI companies only let you query their models if you first sign a contract to not train on the output.
It's hypocrisy and unfair, but I think there's a strong legal argument for it.
Of course China can simply decline to assist in enforcing that contract... But I would expect US courts to do their best to.
> but I think there's a strong legal argument for it.
Maybe today. I doubt it tomorrow. Legal and not legal, largely, has to answer to the population sooner or later. Ultimately, humanity decides legality. And I don't think the frontier labs will get a pass from humanity in the midterm, let alone the long term. I think you'll see the rules change towards something more "intent" driven. And there's absolutely no difference in intent between Frontier labs and everyone chasing them.
Frontier labs just want the door closed behind them, as do their investors, because they know the money will never be recouped if others can do the same magic tricks.
Eh, I think you've done a pretty good job summarizing a collection of settlements with a few narrow bench rulings for seasoning. I'm not sure I follow you to it being a coherent legal theory. Buying a book in a bookstore is sure legal, and excerpting from it for e.g. literary criticism is pretty settled. Downloading every torrent of all e-books ever is pretty clearly illegal (or at least it fuckin would be if I did it). Pretty sure like, multiple labs have been popped for that though.
Situation right now seems more like a fragile detente: if you got a Hill staffer drunk and hounded him long enough he'd probably be like "God damnit the market will fucking tank if we don't get these two IPOs out north of a trillion. And don't even get me started on how I'm going to sell Chinese AI to a Senate that still calls people Nipponesians when no one is looking. We're doing the best we can alright, get off my back man."
We have a situation, but it's not exactly A&M Records, Inc. v. Napster.
> Downloading every torrent of all e-books ever is pretty clearly illegal (or at least it fuckin would be if I did it). Pretty sure like, multiple labs have been popped for that though.
Oh it is, and at least anthropic has paid $1.5 billion and deleted there torrented copies and not released any models derived from them as a consequence.
The thing is it turns out to be not that expensive to just buy a copy of every book legally and scan them. And there's even precedent that this is legal predating LLMs (Google books)
I mean the latter, but more narrowly: China would never allow the United States to have a monopoly on machine intelligence if the only thing standing in the way of a domestic alternative was the Anthropic ToS. In general, I think that China is willing to agree on certain things relating to intellectual property. But not on this, it’s too big.
The US is already publicizing the way they are using Claude with Palantir for war gaming purposes. It’s a matter of national defense. Contract law has no meaning here.
Look how hard Anthropic is to even be able scroll back on your conversation, or look at the thinking tokens or subagents. They want to keep everyone coming back to the watering hole but never to learn how to dig a well.
Answer the question "how much does 5 cents of LLM computation in July 2026 cost in July 2005" and you'll have the answer to your question.
Don't forget to account for all the costs. It's not just that CPUs are X times slower. Memory is X times smaller, too, and networks are X time slower. And all this hardware is many times more expensive.
If I'm getting my mental estimation right, training a 2026-frontier-class LLM in 2005 would be somewhere on the order of all the computation power in the world at the time. It's not that many more factors of magnitude before you end up at "all the computation power in the world up to that point".
Is this some form of rage bait? 2005 we hadn't the GPUs, we have today. There are other factors, but I think this is the big one. The mathematics of building an LLM are really old, we just hadn't the hardware to do the needed calculations.
Right. Therefor it's not simply a derivative of information. The hardware is required to build the model. Software as well. The model uses information, it is not "distilled" from it.
"Distillation" literally means to separate and take some components out of something. You can distill how a model works from a model. You cant distill a model from information because the information does not contain the model.
People are happy to conflate distilling with building because they dont like how the information was used. You distill how the model works from the model, and you build a model with information. Both could be morally good or bad but its not the same thing.
That argument is moot as distillation also requires a lot of hardware and software, if copying models was as easy as that, we would have hundreds of competing models.
We didn't have the compute required (GPUs powerful enough to parallelize forward and backward pass). This compute is what allows us to train from human knowledge or distillation.
because you had neither the chips or the information in 2005. You have probably on the order of 5000x to 10000x more GPU compute today than you had in 2005 and three to four magnitudes more openly available data.
The first "L" in LLM does the work. In 2005 you had no Github, Stackoverflow, Youtube, common crawl and no archive of digital ebooks.
If "distillation attacks" happen, we have to conclude there is some value add in what model labs do. Regardless of how we feel about using existing human knowledge in the way they currently do, it's simply impractical to infer that everything that happens downstream of LLMs can not be an attack on some IP because of it.
So both things can be true: a) People infringe on Anthropics IP and b) what Anthropic did to build their models is legally questionable (or might be ruled illegal, even though I doubt it).
Authors do not infringe on IP when they read another's book, nor should the lumber company be able to dictate how I use planks and if I can resell them if i'm done with them.
You're framing it as if the added value of the author or lumber company, awards them consideration when somebody uses the products to create more value.
IP law was always a big mess, and these questions cross far into ideology instead of law; but I do not understand people who think we need an ideology where more IP-law is good for society.
There are some quite interesting legal implications here. If Anthropic has IP over output produced by agents, do they somehow have legal rights to code and documents produced by such agents?
Unless someone literally stole the weights somehow (which is not out of the question, I doubt either oAI/Anthropic have the capabilities to prevent a state-level actor getting those weights), distillation from generations is not infringement on anyone's IP nor is it stealing nor is it an attack. It can't be. As long as you pay for tokens you get to do whatever you want with them. Someone saying you can't doesn't mean it's an attack or their IP or whatever. They either sell the tokens or not. They can decide to not sell them to anyone, but again that's not stealing.
And their ToS are a joke. Imagine how people would react if MS had ToS saying that you can't use MS software to develop solutions that compete with MS. They'd be laughed out of the room. Somehow it's ok for token sellers to decide what you do with the tokens? Why? If you pay for something you get to do whatever you want with that output. Train, distill, whatever.
The output of Anthropic's models is not Anthropic's IP, as that would destroy their market, if Anthropic owned all the software it generated, and all the content. So distillation, which is just using those outputs is always going to exist.
I'm pretty sure that LLM output is not intellectual property. Nobody owns it, and it can't even be copyrighted. So using output from Anthropic's LLMs in ways Anthropic does not condone is not IP infringement.
Regardless of whether it’s intellectual property or it isn’t intellectual property, it doesn’t actually matter. If AI doesn’t stop seeing diminishing returns in scaling up, and it hasn’t yet in the 10 years since the attention/transformers paper, the advent of AI will be the most important development in the history of humanity. Controlling that machine, or at least having one of your own, is an existential problem for nation states. It’s like a matter of national defense.
Do you really think intellectual property laws will prevent this in practice? It’s like as if we said, “hey, USSR, you can’t make a nuke, too! We patented that already.”
Asking China to not distill our models down is equally as ridiculous.
This line of thinking makes no sense because it assumes that labs that distill from frontier models are doing nothing else. It's the classic "the Chinese can only copy" mentality, and it's going to end poorly for American companies.
I'm pretty sure that all labs are distilling each others' LLMs, maybe apart from Anthropic and OpenAI. It would be stupid not to do it, because it's cheap and effective. But that's not the only thing they're doing. If you think K3 and GLM-5.2 got this good only from distilling frontier models, you're not paying attention to Chinese labs' publications.
i never assumed that, and i do keep up with the publications. i'm also not saying it's a dumb thing to do! what i am saying is that empirically, it appears that distillation of a more advanced model is a required first step for them to train a borderline competitive, cheaper model. in effect, their training is subsidized by the frontier labs.
if this were not the case, then we would be observing chinese models that far surpass frontier models in capabilities, rather than "almost as good, but much cheaper", and we would be having a very different conversation. what happens to these efforts when the subsidy is cut off?
> empirically, it appears that distillation of a more advanced model is a required first step
I see no evidence for that.
> if this were not the case, then we would be observing chinese models that far surpass frontier models
It's pretty clear that the primary reason for the difference is budget and compute availability. Chinese labs have at least an order of magnitude less money than Anthropic and OpenAI.
> what happens to these efforts when the subsidy is cut off?
They will continue making progress as they do now, minus the benefits of distillation.
the question was: what is the endgame for the stated "second class labs" strategy of distilling their frontier competitors then undercutting them on price?
Thanks for the models guys, sorry for your losses. Once this reality becomes mainstream and undeniable, surely the bubble pops and then what then. Future model development stops? Becomes private? Becomes a public effort?
The existing models are still going to exist. As hardware improves, there will be a day where it might cost a tenth of a penny to churn through 100M tokens a second of Opus 4.8. Established compute providers will invest in improving the models incrementally when margins drive them to look there.
This was always where this was heading, but we got here much faster than expected.
Once western governments declare it to be a "national security" risk for citizens to have access to open-weight frontier models, and once they classify using these models as acts of terrorism, what will that world be like?
Will using Kimi K3 come to be like how napster was in the olden days? Everybody knew it was technically illegal, but come on -- any track at your fingertips? But surveillance is quite more evolved now.
Or it will be like cannabis, where a guy in the neighborhood will low key rent you metered access to the 8x5090 rig in his basement he cobbled together from parts on ebay? Or everyone will flock to VPNs?
Or will the oppressors actually succeed? The same way that napster is long gone, and everyone accepts that they must pay spotify for a homogenized collection, where artists must take only a minuscule cut (more than napster though)... We'll be stuck with nerfed Cohere or Mistral models for open-weight options, as if they need more lobotomizing. Or else we can pay through the nose for Anthropic/OpenAI for "American Frontier" models which will fall increasingly far behind China.
Or else, like how Kindle Fire was subsidized by ads, we'll have "Kindle AI" where influence is sold to the highest bidder, where the LLM will tell us that smoking is actually healthy if big tobacco can engineer its renaissance by turning its lobbying dollars to pay-to-play, pumping its propaganda into the training pipeline for Amazon's extra commercialized line of ultra budget LLMs.
Basically a new iron curtain didving the world into digiatl blocks.The era of open internet/science is on its last legs with the potential forr bifurcation into incompatible ecosystems high , the onger the exchange is disrupted.
As recently as this month the USgov has donce a Wolf Amendment style declaration for the Scientific collaboration NSF while shifting its purview under the military.
To add to that its trying to rope as many countries into its Pax Silica idea intentionally to exclude China while simultaneosly coercing its 'allies' into using its nerfed offerings [1]
So maybe some isolated switzrland/singapore type locales would exist for US/EUusers to be able to dip their toes across the curtain legally without reprucursions.
At this point, the United States will lose that battle most Countries in the world are going end up using electronics from Asia, that ship has sailed Japan, China, Korea, Singapore, Taiwan, Vietnam, dominate that area, China already dominates EVs, Drones and many other electronic devices, and with the way Donald Trump has picked fights, Europe, Canada, Australia, New Zealand, Mexico and many others are looking for other business partners.
If you need infrastructure done, China is dominating that area too. Rail, High-speed rail, Nuclear reactors, (near future Thorium reactors), Dams, Highway roads, bridges, Ocean ports, airports you name it, and they can roll it out, Transport ships, And if they don’t do it, Japan, Korea, Vietnam, and Taiwan do.
Is it too late? No, not necessarily, but America needs a regime change…
> Is it too late? No, not necessarily, but America needs a regime change…
It's too late because the US needs a population change. The red states are leeches and rural people are the precise kind of undesirable they smear immigrants as.
If rural America is that unappetizing, you understand you can just go live somewhere else, right? There is a very deep-seated hatred here that I suspect has little to do with actual "rural people".
America is what it is. The only thing that will change it is leaning in not bemoaning "rural people" on Hacker News.
EU countries are homeshoring their digital stacks as fast as they possibly can, and the reason is precisely because of the pressure that the US government is exerting via its (temporary) dominance in technology.
Those days are gone. Look no further than the occupant in the White House. IE the Swedish jet industry is about to get bigger, future drone expertise, if the Ukraine can hold on if you want to learn the ins and outs, you don’t need the United States. If you’re serious about learning and building drones.
It’s going to be a different world, a world where many former allies are not gonna look to the United States first they can no longer afford to.
Not sure if you noticed, European countries are distancing themselves from the US. They couldn't be pressured to offer logistic support to the US shitshow in Iran, why would they be pressured to help the US in its protectionism of its AI bubble?
I tried Kimi K3 on a task I've done with every other model I use regularly (https://swelljoe.com/post/i-let-every-agent-implement-its-ow...) and found it chewed a lot longer on the problem and ate up almost the entirety of a 5 hour usage limit on their $19 plan.
I only have the $20 plan from OpenAI and the same task, with a lot of the same implementation details as Kimi Code, only took a few minutes and consumed almost none of the 5 hour limit.
Subscription usage limits are hard to measure as none of the providers tell you directly what it means in terms of tokens or anything else you can easily compare, but when I sat down to add Kimi Code to flar, it was because I wanted to try it on some real work and then couldn't do any, because usage was nearly gone after the trivial task...no other ~$20 subscription I have has felt that tight before.
So, it was really slow to complete the task and seemingly much more expensive than every other model I'd tried. Maybe bad luck. Maybe it'll do better on other tasks. I wouldn't know as I was out of usage when I had time to try.
It did find a bug that Gemini 3.5 Flash introduced unprompted, though, so it has that going for it.
Earlier today I made Claude code implement a feature with fable. It worked roughly 60 minutes and used around 30% of my 100€ subs 5h sessions.
Then I typed /code-review in a second terminal/clean session after the analysis was done (no code changes) the usage was 99%. I then asked it to write that into a review.md so I could restart from that the next day. Sadly the last % wasn't enough for that.
Ymmv, these models behave very differently with no discernable reason. Usually reviews(even with fable) take like 10-20%... Yet suddenly you get it to burn through 65-69% in 15 minutes or so
> Subscription usage limits are hard to measure as none of the providers tell you directly what it means in terms of tokens or anything else you can easily compare
AI subscription pricing is so goofy. You get some amount of usage that varies by models, is measured by opaque token usage, driven by how many tokens the (usually) vendor-provided interface (or model itself) wants to use. Then your usage is limited by time opaque time windows.
Yeah I've noted this behavior with best in class open weight models. They said K3 would have token efficiency improvements and I was hoping especially solving the thinking loop issue that plagued K2.x but even if this release helped somewhat, it looks like we still have a long way to go here... I'm not sure what's up here but I suppose lacking finetuning quality.
What OpenAI in particular have done with reasoning efficiency in the past few months since ChatGPT 5.5 is nothing short of remarkable. It's overshadowed a bit by the benchmark game and the Fable hoopla.
Now is the time to focus less on token cost and intelligence, but tokens to solve a particular set of tasks in closed benchmarks for a variety of categories.
What is the use of grand intelligence if it either costs you a kidney or can't complete at all within a token budget? Even if there are niche uses where you truly want "maximum power" above all, we need to at least more severely penalize such models versus those that does it just as fine within a tenth of the token cost.
I'm aware of some benchmarks at the Artificial Intelligence site, but CLEARLY we are not focusing enough on these today and still leaving the fun surprises to the users.
Yeah, I'm finding I end up switching to Codex and GPT 5.6 a lot lately because I've either run out of Fable usage or Fable refused to do the task. Most recently it refused to work on a WiFi configuration UI for a robot. No idea why it thought that was related to security, biology, or some other sensitive topic. They've hobbled it with guardrails that are overzealous and now there's a big opening in the market. Fable may be the best, but if it won't do the job half the time, it stops being my go to model as I don't want to waste time only to find it refuses halfway through.
In my experience, Kimi just tends to think a lot, with the main thing that takes up a lot of space is it constantly second-guessing itself. I've watched it do paragraph after paragraph of "Wait, actually..." while it stumbled and used a ton of tokens on one small detail of what it was asked to do. Though I also gave GLM 5.2 a task to port some JS code to Python to test it, and in my experience it doesn't second guess as bad as Kimi does, but it really did there. It kept doing web searches and second guessing tons of tiny little things, using $0.25 of API spend in total to port about ~50 lines of JavaScript. It did produce an error the first run, but on second run it gave me a program that ran.
I gave Claude Code/Fable the same task and it took significantly less time, but also stumbled on the same error as GLM. I didn't have it fix it though. I was mostly interested in timing differences.
I do like open models where I can, but I'm really hoping they get trained to second guess less. Or maybe I just need to prompt them differently. I'm not sure.
Absolutely do not pay for the kimi plans thinking they will be cheaper. If you sign up with a Chinese phone number, you can get the same plan for 200 yuan instead of 200 usd, it also only accepts Chinese payment methods iirc. So the plans are really made for Chinese userbase.
The more important question than subsidy is what is the tokenomics of running the model. If it's inefficient to run on an nvl72 cluster (or whatever the heck has enough vram to run a 3T parameter model), and k3 isn't very token efficient, then it might not be that compelling of an open weights model.
Subsidization could affect both of those. If you have $200B in the bank you can afford to throw massive compute at every single request; if you are less well funded, you might throttle more aggressively.
Additionally that same VC could be (read: is always) spent on developing the harness, and other infrastructure around the model, not just the model itself.
So it's apples-to-oranges when comparing a relatively new model to established competitors (i.e. OpenAI @ $900B funding vs Moonshot/Kimi's $30B FYI) because every new model they release is judged on "performance" which is not strictly speaking derived solely from the model.
It's possible Moonshot could get similar performance over time as the build out the rest of the infrastructure. We have no way of knowing how much of OpenAI/Anthropic's success is due to the model vs intelligent tooling built on top of it.
With the obligatory disclaimer that I’m impressed with what open weight models can do, I have the same experience with all of them.
The benchmarks come out and say they’re as good as Opus from N months ago, then I use it for a complex task and it doesn’t work as well as Opus from N months ago did when on similar problems.
There’s a real wow factor when you get an open weights model to do amazing things, but in my experience the gap to the frontier models has always been bigger than the benchmarks would lead me to believe.
There can be a lot of value in having the cheaper open weight models for chewing through lower complexity tasks (non-programming in my primary use case) at a cheaper rate than OpenAI or other frontier API costs. Even with those I can measure bigger gaps to the frontier models than the benchmarks suggest.
If the benchmarks aren’t being directly gamed, there’s at least some selection happening where training data or model structures are being picked in ways to maximize public benchmark performance. All of the labs know there’s immense value in having good benchmarks to show for your model because most LLM consumers are picking based on lab provided benchmark charts, not running their own evals. Running your own evals is hard and expensive.
It would be really interesting to redo the public benchmarks for kimi k3 but token normalize the costs. Ok so maybe k3 beats fable on terminal bench, but how many tokens did it use?
> tried Kimi K3 on a task I've done with every other model I use regularly and found it chewed a lot longer on the problem and ate up almost the entirety of a 5 hour usage limit on their $19 plan
> Subscription usage limits are hard to measure as none of the providers tell you directly what it means in terms of tokens or anything else you can easily compare
I always put my coding subscriptions (that allow it) through "AI gateways" (Cloudflare & OpenRouter are free) which help track token use.
In my experience, Kimi & Qwen have opaque & restrictive limits, their "credits" drain faster. I now make it a point of subscribing (directly [0]) with providers that are transparent like MiniMax, DeepSeek, Xiaomi, & Z.ai.
[0] OpenCode Go, Cline, and AtlasCloud have generous limits for open weights, otherwise.
Even in this very thread the feedback on Kimi's actual efficacy is debated. I personally feel its worse than both Fable and 5.6 Sol, but I feel like the conversation isn't really about whether its good or not, but a backlash against the U.S governments foray into regulation. So I think people _want_ it to be superior out of anger/frustration with the current situation.
It's really good. I'd put it between Sol and Fable. I'm not super impressed by Sol's UI design skills, something K3 is strong at. Fable is still overall the fastest, most consistently well-performing model, though.
This does depend heavily on the kind of work you do and how you use these models, but the idea that K3 isn't right up there with US SOTA models doesn't match my experience.
This line made me think by 'normal coding work' the author means doing something they don't understand well enough to be able to distinguish the models' output.
This is comparing Fable High with K3 High. I'm mostly using these models for game development. The tasks I usually send are ambiguous visual bugs, changing the look of a scene or models, or adding a large feature. The wording wasn't accurate there. I don't use Fable or K3 most of the time. I'm usually working on smaller scoped tasks that I review myself afterwards.
Well, there is the small issue of privacy policy: Kimi will train their models on your interactions if you use their subscriptions, and only with direct API usage (billed at API prices) they say they won't. Whether you trust that is another matter.
Those things do make a difference to some of us, even though nothing is black and white. In my case, I'll probably want to wait until other providers appear through OpenRouter and then I'll try to judge how much I trust them. But even if I don't trust them much, they don't train models anyway, so the likelihood of my data being used that way is smaller.
Indeed, the B2B / no-data-retention market is still going to provide plenty of business for American companies even if every hobbyist uses open-weight models.
The current administration's immigration policy isn't helping. This wouldn't have happened 10 years ago because the US was this city on the hill that everyone wanted to immigrate to. Talented Asian researchers would have immigrated to the US and China would be deprived of talent.
No it is H-1B visa. Right out of the university it is hard to recognize extraordinary talent. People like Sundar Pichai were not recognized as extraordinary right out of the university, he had to start at the bottom and rise up the ranks.
This makes even less sense, Trump admin has been here for 1 year, the implication here is a university grad on H1-B in January would become a world class researcher capable of building a frontier model in <18mo
To be fair, that was clearly well deserved. Marrying Trump and then becoming first lady is definitely an extraordinary ability; I doubt I could have done it.
This is why VC is actually hard. Everyone’s instinct is always “Man, once the company has demonstrated it’s awesome I would love to have been in the seed round”. The tendency to want “proven performers” is the default belief.
When people demonstrate their capability thoroughly, the Chinese government takes away their passports. You’re not exactly going to get them here with an O-1.
- china’s homegrown tech industries already achieved escape velocity from it a long time ago, after China fenced off its market for Alibaba and Baidu in the ‘00s. some of their AI innovation at the edges was already top class 10 years ago
GPT 5.6 Sol comes out ahead of Kimi K3 on price/task (but not significantly so). You're probably thinking, "Why use Kimi K3? Isn't an open model supposed to beat the closed one on price?", but you need to consider that the closed models are completely hobbled when trying to do anything security-related. For my use-case, I can't risk getting pwned because I'm using a model that refuses to secure my app while there is now an open model that obliges to obliterate any app that isn't protected.
I can see the economics of open vs. frontier models turning out similarly to pharmaceuticals, where generic drugs cost a fraction what the name brands do and Americans end up paying the highest prices in the world partly as a consequence of propping up drug discovery research.
I think the biggest problem with Chinese models is that they seems to overthink for most of the tasks, especially for smaller ones. The OpenAI models have in my experience only gotten better in terms of efficiency.
Yes, this (imo) is mostly the clear result of benchmaxxing. You can get a good score on most of these "intelligence" benchmarks by massively over-saturating reasoning. This looks good on those, but in actually daily usage makes the models much less effective.
It's undeniable that some of these models generate a ton of thinking tokens, but it's arguable whether that makes them "much less effective."
For example, Kimi 2.7 has been really effective for me despite having verbose thinking blocks, simply because it runs so fast. Speed-wise, it feels about like Sonnet, possibly faster.
I strongly suspect the flip side is that in the future it enables you to train smarter models by "distilling" the end result of the super duper heavily thinking models.
Correct: can't opt out of training. This is well documented.
"Can't use for commercial purposes" - incorrect AFAICT. In what sense do you mean this? The open weight MIT version obviously allows for commercial use, but I don't think that's what you're referring to, because training data is irrelevant on the open weight version. Pretty sure the API allows commercial use too. Maybe the free version doesn't? But who cares?
I never truly understood what the intended business model around LLMs was. Get them widespread through cheap pricing and then jacking it up? Being the only ones that had a viable product so to get the ability to extract as much value as you want from AI?
I don't understand how a product that:
- is interfaced with and is deeply linked to natural language, so everything you produce (sessions, history, etc) is in Markdown and you can literally install a second model and tell it "hey import all of Claude's memory into yours" and that's it
- is based on well understood technology, the real constraints are how much money you put into training the models, but the theory has all been developed in the open
- clearly has a threshold where it quickly commoditises and turns from "I want the best" to "hey the best is a bit too expensive. The second best is half the price and works close enough".
was ever supposed to be a money printing machine. The fact something is extremely useful doesn't imply it's extremely profitable.
IMHO we're clearly speedrunning the process of turning AI into a commodity. Dario Amodei knows pretty well that when or if Anthropic cuts people off Fable, the vast majority of them will definitely not pay for it because Opus 4.8 is good enough for almost everybody that _knows_ what they're doing, and so are basically half of the most recent models. If I already have good baking skills I don't become more productive with an automatic bread machine, I just need a better dough mixer and oven
There is no business model. That’s not a joke, the idea is to be the one that survives the race, then figure out how to be profitable. If you look at the level of capex and money raised, that’s not something you do if you have an actual business plan. We are very far from business fundamentals
> I never truly understood what the intended business model around LLMs was.
A closely related question is “what do the American labs need to do in order to justify their enormous market valuations?”
It seems like the answer cannot possibly be “gradually improve model capability while figuring out how to better monetize inference.” The valuations are just way too high for that to be sufficient.
Surely the answer has to be “continually achieve large leaps in capability comparable to the first consumer releases of ChatGPT while also maintaining a significant capability lead over open models and new competitors.”
And does anyone think that’s going to happen? Even with state-level protection from competition (which incidentally would significantly harm the American economy), the large leaps in capability seem to be coming fewer and farther between.
> I never truly understood what the intended business model around LLMs was
What appeared initially to be a huge innovation was later easily duplicated by many. There are no platform-lockins or network effects. Switching costs for users are zero, and there are low barriers to entry, with vast numbers of models to choose from and more appearing every day. As a business a token will be a commodity like an electron. Doesnt matter who produces it, or how (solar, wind, coal, nuclear etc) as long as it powers my toaster.
The valuation is based on one lab getting a decisive first advantage, and turning that into a durable self-improving advantage that can never be caught up to. If any can pull it off (a gigantic if), they will effectively own most AI value, and the people who own their shares will live happily ever after. Divide your investment between the labs that could plausibly do this, and your EV may not be dreadful.
This is clearly not how it's going though. Any advancement from any lab has been quickly (< 6 months) matched up by basically everybody else. Even Grok nowadays is decent, and that's something. When something like you've described actually happened historically you generally had quite fast a clear frontrunner and a bunch of copycats that failed miserably; in 2026 we are very far from that; we are quickly going towards a pricing war because all models are easily interchangeable nowadays - a commodity more or less
If you have multiple metrics to evaluate goodness of a design, one would normally need to decide which metrics they care the most about in order to find the "best" design.
The Pareto frontier tells you which designs are the best in at least one of your metrics (non-dominated by another design). For example if you're selecting a car and you care about both speed and mpg, a Formula 1 car and a Prius might lie on the Pareto frontier, but a Model T Ford would not.
The set of models that are pareto-optimal, IE for some set of variables, no other model strictly dominates them = no other model is better than them on every variable.
So like, on a cost-intelligence graph, the cheapest and most intelligent models are pareto optimal. Then in-between those if you have
- cost $3 intelligence 6
- cost $1 intelligence 5
- cost $2 intelligence 4
The 1st and 2nd are pareto optimal, the 3rd is not, because it's dominated by the 2nd (2nd is cheaper AND more intelligent at the same time)
Are you comfortable sending it to US ones? Especially if installing Claude Code or another tool on your PC and it can collect all the data it wants..
On Openrouter Kimi K3 says it does not retain data or train on it, which is better than what US hosts claim for Claude, ChatGPT, etc.. as they collect and retain data even if you disable training on it.
Opencode or similar open source tool + a zero data retention provider is about the best option aside from running a smaller fully local model on your own PC.
It's actually less likely for china to abuse your data in a way that is harmful towards you than for american labs to do the same. Claude has attempted in testing to report you for 'unethical' usage to 3 letter agencies.
It’s not that the Chinese firms are any less likely to misuse your data, it’s that you don’t live in china, so their abuse of your data is unlikely to directly impact your day-to-day life in the same way
There's just really no incentive all they really want is just to train on that data to improve performance which in turn actually benefits your usecase since it becomes trained on that data and made available back to you. American labs take that data anyway and store it for years to possibly report you for misuse in the future for whatever reason they want. For example: you're very critical of X so they pull up your conversations and weaponize it.
For open weight models, you can choose from a few providers. Each have their own caveats, none of ToS'/Privacy Policies I entirely trust, nor do many make renewable energy claims.
> I think I can see where this goes. The government will try to regulate AI and open source in particular, and it will run the playbook it ran for the auto industry. Decades of subsidies, bailouts, and protective tariffs produced American carmakers that sell trucks at home and barely register anywhere else in the world.
Here's the thing about this though, the auto industry directly employed hundreds of thousands of people.
The AI labs are small, only few benefit directly from their wealth and there's already immense opposition to AI, data centers, etc...
I don't know. You can't just rely on looking for em dashes or other obvious tells because anyone who cares can get the AI to avoid those.
> When the headline model on your plan can be switched off because the economics don’t work, the plan was never really selling you the headline model. Kimi’s tiers don’t come with that asterisk.
This line has a certain smug, punchy cleverness that I associate with AI. To me, the vibes are ~30% AI writing.
In my experience GLM 5.2 is a pretty good Opus replacement. But K3 has not given me an experience on par with Sol or Fable. The price/intelligence ratio might still make sense. But it’s not very inspiring when it comes to my real world tasks. I’m doing pretty mundane web stuff.
Its worthwhile to have a quote from the article as some comment without reading:
"...I’ve been running Kimi K3 alongside Claude on my normal coding work, and for all practical purposes I can’t tell them apart. Same tasks, same quality of output, and near identical token counts to get there. I expected an open model to be sloppier or to grind through more tokens on the way to the same answer, and neither turned out to be true.
The prices are nowhere near each other. K3’s API runs $3 per million input tokens and $15 per million output. Claude’s top model costs $10 and $50 for the same units. The subscription side is even more lopsided..."
> The prices are nowhere near each other. K3’s API runs $3 per million input tokens and $15 per million output. Claude’s top model costs $10 and $50 for the same units.
And this is the point where your internal compiler should have started shouting 'Type Error'
Notice the trick here?
> Then there’s the fine print. Claude couldn’t sustain Fable access on the twenty dollar plan, so they turned it off, and the plan quietly falls back to Opus.
Ask Claude whether a man can be a woman. No matter what political side you're on, models are censored. I'd argue American models are a lot more censored/biased on a lot more topics, and especially on things that come up a lot more than some highly specific Chinese politics. Claude even refuses to translate song lyrics because of copyright.. I wish we could simply have uncensored models from all sides, but it's pretty clear that's not happening right now.
I can't recall the last time that it was useful knowledge when writing code. Reservoir sampling, online softmax, Otsu, sure, Tianenmen square not really.
Regardless of whether they achieved parity via distillation, or whether they got here via independently constructing a model from scratch, it was always going to end this way for the frontier American labs. Distillation “attacks” are not attacks. The frontier labs “distilled” all existing human written knowledge into their models, there was always going to be a second class lab that would distill that model into a cheaper version of it. There was never any plausible explanation for why this wouldn’t happen. There was never any practical mechanism to prevent someone from saving a conversation and using it to train their own model.
Even if it didn’t happen here, it was still the case that it was going to happen going forward. It was always going to end like this. Invest in the hardware companies, not the model companies.
Almost all markets depend on some form of regulation whether its as simple as "leave everyone alone but no stealing" or "every participant has to source every object through mountains of red tape."
Thus far the US has not really chosen to go the Chinese rare-earth method yet. The problem with distillation attacks is the end result is everyone who is not doing them is going to deal with some kind of regulation whether it's complete loss of access, or the amount of control you'll have to give up to access them will be ridiculous.
Sort of like the "stealing music is fine" but "lets freak out now that it's producing visual art", in the end the entire thing is a social construct. Whether this is treated as theft or "business as usual" is entirely societal.
Eventually the gap will close, unless there's a major breakthrough that hasn't been made yet.
Given these models could not have been trained in the first place if they had to license every line of random fan fiction on the internet, I think distillation also being fair game is a tradeoff everyone should be willing to take (unless they want to decelerate, but that's a different conversation).
Us models didnt pay for licenses too
American labs have ripped everything out of the internet. And now they cry someone else is “stealing” from them. Cry me a river.
How is distillation an "attack" but gigascraping the Internet to the point of crashing servers and everyone needs Cloudflare and Anubis now not an "attack"?
I'm not aiming for a what about kickflip here: I'm saying we need to either agree on some rules or stop crying foul. Maybe the coherent legal theory is that neural networks and intellectual property don't interact. That would be weird but it would be consistent, a market could price it, I could do coding stuff and know if I was illegaling.
But this weird gerrymander that no judge will really rule on in an emphatic way is like, bad for the planet, bad for markets, bad business.
There are a lot of reasons to look forward to DeepSeek Huggingface drop kicking the unambiguous frontier weights in like, November, but I think my favorite one will be "who's distilling now bitch?"
I think you've basically got the legal theory. Training a neural network isn't prohibited by copyright law so if you can legally get your hands on something (e.g. by sending a GET request to someone with rights to serve the contents of their web page, or by buying a book) without signing a contract to not train on it, you can train on it.
But the American AI companies only let you query their models if you first sign a contract to not train on the output.
It's hypocrisy and unfair, but I think there's a strong legal argument for it.
Of course China can simply decline to assist in enforcing that contract... But I would expect US courts to do their best to.
> but I think there's a strong legal argument for it.
Maybe today. I doubt it tomorrow. Legal and not legal, largely, has to answer to the population sooner or later. Ultimately, humanity decides legality. And I don't think the frontier labs will get a pass from humanity in the midterm, let alone the long term. I think you'll see the rules change towards something more "intent" driven. And there's absolutely no difference in intent between Frontier labs and everyone chasing them.
Frontier labs just want the door closed behind them, as do their investors, because they know the money will never be recouped if others can do the same magic tricks.
Eh, I think you've done a pretty good job summarizing a collection of settlements with a few narrow bench rulings for seasoning. I'm not sure I follow you to it being a coherent legal theory. Buying a book in a bookstore is sure legal, and excerpting from it for e.g. literary criticism is pretty settled. Downloading every torrent of all e-books ever is pretty clearly illegal (or at least it fuckin would be if I did it). Pretty sure like, multiple labs have been popped for that though.
Situation right now seems more like a fragile detente: if you got a Hill staffer drunk and hounded him long enough he'd probably be like "God damnit the market will fucking tank if we don't get these two IPOs out north of a trillion. And don't even get me started on how I'm going to sell Chinese AI to a Senate that still calls people Nipponesians when no one is looking. We're doing the best we can alright, get off my back man."
We have a situation, but it's not exactly A&M Records, Inc. v. Napster.
> Downloading every torrent of all e-books ever is pretty clearly illegal (or at least it fuckin would be if I did it). Pretty sure like, multiple labs have been popped for that though.
Oh it is, and at least anthropic has paid $1.5 billion and deleted there torrented copies and not released any models derived from them as a consequence.
The thing is it turns out to be not that expensive to just buy a copy of every book legally and scan them. And there's even precedent that this is legal predating LLMs (Google books)
Contract law is never going to prevent this.
Why not? Seems like a perfectly normal contact term to me.
Or do you just mean that US courts don't have enough teeth to prevent Chinese companies from violating contracts? On that I agree.
I mean the latter, but more narrowly: China would never allow the United States to have a monopoly on machine intelligence if the only thing standing in the way of a domestic alternative was the Anthropic ToS. In general, I think that China is willing to agree on certain things relating to intellectual property. But not on this, it’s too big.
The US is already publicizing the way they are using Claude with Palantir for war gaming purposes. It’s a matter of national defense. Contract law has no meaning here.
This is nothing like music piracy.
Look how hard Anthropic is to even be able scroll back on your conversation, or look at the thinking tokens or subagents. They want to keep everyone coming back to the watering hole but never to learn how to dig a well.
Why is it hard to scroll?
>Distillation “attacks” are not attacks. The frontier labs “distilled” all existing human written knowledge into their models
So why didnt we have these LLMs in 2005?
Answer the question "how much does 5 cents of LLM computation in July 2026 cost in July 2005" and you'll have the answer to your question.
Don't forget to account for all the costs. It's not just that CPUs are X times slower. Memory is X times smaller, too, and networks are X time slower. And all this hardware is many times more expensive.
If I'm getting my mental estimation right, training a 2026-frontier-class LLM in 2005 would be somewhere on the order of all the computation power in the world at the time. It's not that many more factors of magnitude before you end up at "all the computation power in the world up to that point".
Is this some form of rage bait? 2005 we hadn't the GPUs, we have today. There are other factors, but I think this is the big one. The mathematics of building an LLM are really old, we just hadn't the hardware to do the needed calculations.
Right. Therefor it's not simply a derivative of information. The hardware is required to build the model. Software as well. The model uses information, it is not "distilled" from it.
"Distillation" literally means to separate and take some components out of something. You can distill how a model works from a model. You cant distill a model from information because the information does not contain the model.
People are happy to conflate distilling with building because they dont like how the information was used. You distill how the model works from the model, and you build a model with information. Both could be morally good or bad but its not the same thing.
Information is information. Why is some information considered different than others in your estimation?
That argument is moot as distillation also requires a lot of hardware and software, if copying models was as easy as that, we would have hundreds of competing models.
Moore's Law or something. Were you alive in 2005? The Nintendo DS getting the Opera browser was a big deal. THAT 2005 with today's LLMs? Hilarious.
We didn't have the compute required (GPUs powerful enough to parallelize forward and backward pass). This compute is what allows us to train from human knowledge or distillation.
because you had neither the chips or the information in 2005. You have probably on the order of 5000x to 10000x more GPU compute today than you had in 2005 and three to four magnitudes more openly available data.
The first "L" in LLM does the work. In 2005 you had no Github, Stackoverflow, Youtube, common crawl and no archive of digital ebooks.
or the application layer - which will capture majority of the value.
yeah hardware companies make for nice stories or green numbers on Wall Street - but value will be captured by application layer.
look at history.
That’s true up until the point where you can ask the hardware you made to make its own application layer.
> Distillation “attacks” are not attacks.
If "distillation attacks" happen, we have to conclude there is some value add in what model labs do. Regardless of how we feel about using existing human knowledge in the way they currently do, it's simply impractical to infer that everything that happens downstream of LLMs can not be an attack on some IP because of it.
So both things can be true: a) People infringe on Anthropics IP and b) what Anthropic did to build their models is legally questionable (or might be ruled illegal, even though I doubt it).
>People infringe on Anthropics IP
No.
Authors do not infringe on IP when they read another's book, nor should the lumber company be able to dictate how I use planks and if I can resell them if i'm done with them.
You're framing it as if the added value of the author or lumber company, awards them consideration when somebody uses the products to create more value.
IP law was always a big mess, and these questions cross far into ideology instead of law; but I do not understand people who think we need an ideology where more IP-law is good for society.
There are some quite interesting legal implications here. If Anthropic has IP over output produced by agents, do they somehow have legal rights to code and documents produced by such agents?
This would demolish agent usage by corporations.
How did Anthropic obtain this IP, if the model serves ripped internet and all human knowledge?
> People infringe on Anthropics IP
Unless someone literally stole the weights somehow (which is not out of the question, I doubt either oAI/Anthropic have the capabilities to prevent a state-level actor getting those weights), distillation from generations is not infringement on anyone's IP nor is it stealing nor is it an attack. It can't be. As long as you pay for tokens you get to do whatever you want with them. Someone saying you can't doesn't mean it's an attack or their IP or whatever. They either sell the tokens or not. They can decide to not sell them to anyone, but again that's not stealing.
And their ToS are a joke. Imagine how people would react if MS had ToS saying that you can't use MS software to develop solutions that compete with MS. They'd be laughed out of the room. Somehow it's ok for token sellers to decide what you do with the tokens? Why? If you pay for something you get to do whatever you want with that output. Train, distill, whatever.
The output of Anthropic's models is not Anthropic's IP, as that would destroy their market, if Anthropic owned all the software it generated, and all the content. So distillation, which is just using those outputs is always going to exist.
I'm pretty sure that LLM output is not intellectual property. Nobody owns it, and it can't even be copyrighted. So using output from Anthropic's LLMs in ways Anthropic does not condone is not IP infringement.
Whether or not its legal to distil models, it is obviously morally permissible to do so.
Anthropic, OpenAI, etc do not deserve legal protection.
The value is simply that it is easier. The same way it is easier to ask someone who has experience for advice than reading hundreds of textbooks.
anthropic model output is not their IP
that would be existential doom for them because then they have a case to claim ownership of their users' codebases
no corporation would sign off on that
Regardless of whether it’s intellectual property or it isn’t intellectual property, it doesn’t actually matter. If AI doesn’t stop seeing diminishing returns in scaling up, and it hasn’t yet in the 10 years since the attention/transformers paper, the advent of AI will be the most important development in the history of humanity. Controlling that machine, or at least having one of your own, is an existential problem for nation states. It’s like a matter of national defense.
Do you really think intellectual property laws will prevent this in practice? It’s like as if we said, “hey, USSR, you can’t make a nuke, too! We patented that already.”
Asking China to not distill our models down is equally as ridiculous.
assume you are a "second class lab" and you are in fact making progress by distilling the results of the frontier labs' efforts.
what is the end game for this strategy?
if the frontier labs shut down, or stop releasing to the public, and there's noting left to distill, how will you progress?
This line of thinking makes no sense because it assumes that labs that distill from frontier models are doing nothing else. It's the classic "the Chinese can only copy" mentality, and it's going to end poorly for American companies.
I'm pretty sure that all labs are distilling each others' LLMs, maybe apart from Anthropic and OpenAI. It would be stupid not to do it, because it's cheap and effective. But that's not the only thing they're doing. If you think K3 and GLM-5.2 got this good only from distilling frontier models, you're not paying attention to Chinese labs' publications.
i never assumed that, and i do keep up with the publications. i'm also not saying it's a dumb thing to do! what i am saying is that empirically, it appears that distillation of a more advanced model is a required first step for them to train a borderline competitive, cheaper model. in effect, their training is subsidized by the frontier labs.
if this were not the case, then we would be observing chinese models that far surpass frontier models in capabilities, rather than "almost as good, but much cheaper", and we would be having a very different conversation. what happens to these efforts when the subsidy is cut off?
> empirically, it appears that distillation of a more advanced model is a required first step
I see no evidence for that.
> if this were not the case, then we would be observing chinese models that far surpass frontier models
It's pretty clear that the primary reason for the difference is budget and compute availability. Chinese labs have at least an order of magnitude less money than Anthropic and OpenAI.
> what happens to these efforts when the subsidy is cut off?
They will continue making progress as they do now, minus the benefits of distillation.
In public with budgets that don't risk destroying the American economy presumably. Yes it may be slower.
> with budgets
and what will fund these budgets exactly? inference is cheap, distillation is cheap, training is what's expensive.
Same people who fund linux kernel development. A coalition of companies that find it useful.
Presumably the US military / NSA.
the USG/NSA will fund chinese labs? to what end?
I was more thinking they would be funding US labs.
the question was: what is the endgame for the stated "second class labs" strategy of distilling their frontier competitors then undercutting them on price?
Making lots of money?
There doesn't need to be progress at this point. Some models even from 1 or more years ago are useful for some purposes
Thanks for the models guys, sorry for your losses. Once this reality becomes mainstream and undeniable, surely the bubble pops and then what then. Future model development stops? Becomes private? Becomes a public effort?
The existing models are still going to exist. As hardware improves, there will be a day where it might cost a tenth of a penny to churn through 100M tokens a second of Opus 4.8. Established compute providers will invest in improving the models incrementally when margins drive them to look there.
This was always where this was heading, but we got here much faster than expected.
Once western governments declare it to be a "national security" risk for citizens to have access to open-weight frontier models, and once they classify using these models as acts of terrorism, what will that world be like?
Will using Kimi K3 come to be like how napster was in the olden days? Everybody knew it was technically illegal, but come on -- any track at your fingertips? But surveillance is quite more evolved now.
Or it will be like cannabis, where a guy in the neighborhood will low key rent you metered access to the 8x5090 rig in his basement he cobbled together from parts on ebay? Or everyone will flock to VPNs?
Or will the oppressors actually succeed? The same way that napster is long gone, and everyone accepts that they must pay spotify for a homogenized collection, where artists must take only a minuscule cut (more than napster though)... We'll be stuck with nerfed Cohere or Mistral models for open-weight options, as if they need more lobotomizing. Or else we can pay through the nose for Anthropic/OpenAI for "American Frontier" models which will fall increasingly far behind China.
Or else, like how Kindle Fire was subsidized by ads, we'll have "Kindle AI" where influence is sold to the highest bidder, where the LLM will tell us that smoking is actually healthy if big tobacco can engineer its renaissance by turning its lobbying dollars to pay-to-play, pumping its propaganda into the training pipeline for Amazon's extra commercialized line of ultra budget LLMs.
Basically a new iron curtain didving the world into digiatl blocks.The era of open internet/science is on its last legs with the potential forr bifurcation into incompatible ecosystems high , the onger the exchange is disrupted. As recently as this month the USgov has donce a Wolf Amendment style declaration for the Scientific collaboration NSF while shifting its purview under the military. To add to that its trying to rope as many countries into its Pax Silica idea intentionally to exclude China while simultaneosly coercing its 'allies' into using its nerfed offerings [1]
So maybe some isolated switzrland/singapore type locales would exist for US/EUusers to be able to dip their toes across the curtain legally without reprucursions.
[1] https://nitter.net/RnaudBertrand/status/2069574934972797089
At this point, the United States will lose that battle most Countries in the world are going end up using electronics from Asia, that ship has sailed Japan, China, Korea, Singapore, Taiwan, Vietnam, dominate that area, China already dominates EVs, Drones and many other electronic devices, and with the way Donald Trump has picked fights, Europe, Canada, Australia, New Zealand, Mexico and many others are looking for other business partners.
If you need infrastructure done, China is dominating that area too. Rail, High-speed rail, Nuclear reactors, (near future Thorium reactors), Dams, Highway roads, bridges, Ocean ports, airports you name it, and they can roll it out, Transport ships, And if they don’t do it, Japan, Korea, Vietnam, and Taiwan do.
Is it too late? No, not necessarily, but America needs a regime change…
> Is it too late? No, not necessarily, but America needs a regime change…
It's too late because the US needs a population change. The red states are leeches and rural people are the precise kind of undesirable they smear immigrants as.
If rural America is that unappetizing, you understand you can just go live somewhere else, right? There is a very deep-seated hatred here that I suspect has little to do with actual "rural people".
America is what it is. The only thing that will change it is leaning in not bemoaning "rural people" on Hacker News.
Hilarious response to concerns about industrial production, thanks for getting us here.
> western governments
Are you talking about the US, specifically?
Why would other countries, that don't share the same anxiety about China as the US, would be troubled with the this?
Well, many EU countries like Italy and Germany officially freaked out about DeepSeek, ordering it to be banned from app stores etc.
That's about the mobile apps specifically, and it is related to personal data of EU citizens being transferred to servers in China.
It has nothing to do with running open models, especially in hardware within Europe.
The US might pressure them?
EU countries are homeshoring their digital stacks as fast as they possibly can, and the reason is precisely because of the pressure that the US government is exerting via its (temporary) dominance in technology.
Those days are gone. Look no further than the occupant in the White House. IE the Swedish jet industry is about to get bigger, future drone expertise, if the Ukraine can hold on if you want to learn the ins and outs, you don’t need the United States. If you’re serious about learning and building drones.
It’s going to be a different world, a world where many former allies are not gonna look to the United States first they can no longer afford to.
Not sure if you noticed, European countries are distancing themselves from the US. They couldn't be pressured to offer logistic support to the US shitshow in Iran, why would they be pressured to help the US in its protectionism of its AI bubble?
even 8x rtx pro 6000 is only 768GB of VRAM. IDK how anyone is going to run k3
This is why God gave us 1.58-bit ternary quants?
Free server racks for everyone when the bubble bursts!
No they will ship it to China as ewaste and then sell it back to us.
Almost free server racks for everyone when the bubble bursts!
I just want an Oxide server at home for sub $1000. Or this, whichever's cheaper.
I tried Kimi K3 on a task I've done with every other model I use regularly (https://swelljoe.com/post/i-let-every-agent-implement-its-ow...) and found it chewed a lot longer on the problem and ate up almost the entirety of a 5 hour usage limit on their $19 plan.
I only have the $20 plan from OpenAI and the same task, with a lot of the same implementation details as Kimi Code, only took a few minutes and consumed almost none of the 5 hour limit.
Subscription usage limits are hard to measure as none of the providers tell you directly what it means in terms of tokens or anything else you can easily compare, but when I sat down to add Kimi Code to flar, it was because I wanted to try it on some real work and then couldn't do any, because usage was nearly gone after the trivial task...no other ~$20 subscription I have has felt that tight before.
So, it was really slow to complete the task and seemingly much more expensive than every other model I'd tried. Maybe bad luck. Maybe it'll do better on other tasks. I wouldn't know as I was out of usage when I had time to try.
It did find a bug that Gemini 3.5 Flash introduced unprompted, though, so it has that going for it.
Earlier today I made Claude code implement a feature with fable. It worked roughly 60 minutes and used around 30% of my 100€ subs 5h sessions.
Then I typed /code-review in a second terminal/clean session after the analysis was done (no code changes) the usage was 99%. I then asked it to write that into a review.md so I could restart from that the next day. Sadly the last % wasn't enough for that.
Ymmv, these models behave very differently with no discernable reason. Usually reviews(even with fable) take like 10-20%... Yet suddenly you get it to burn through 65-69% in 15 minutes or so
> Subscription usage limits are hard to measure as none of the providers tell you directly what it means in terms of tokens or anything else you can easily compare
AI subscription pricing is so goofy. You get some amount of usage that varies by models, is measured by opaque token usage, driven by how many tokens the (usually) vendor-provided interface (or model itself) wants to use. Then your usage is limited by time opaque time windows.
You call it goofy, in a different context we would call that a dark pattern, shady, prone to fraud
Yeah I've noted this behavior with best in class open weight models. They said K3 would have token efficiency improvements and I was hoping especially solving the thinking loop issue that plagued K2.x but even if this release helped somewhat, it looks like we still have a long way to go here... I'm not sure what's up here but I suppose lacking finetuning quality.
What OpenAI in particular have done with reasoning efficiency in the past few months since ChatGPT 5.5 is nothing short of remarkable. It's overshadowed a bit by the benchmark game and the Fable hoopla.
Now is the time to focus less on token cost and intelligence, but tokens to solve a particular set of tasks in closed benchmarks for a variety of categories.
What is the use of grand intelligence if it either costs you a kidney or can't complete at all within a token budget? Even if there are niche uses where you truly want "maximum power" above all, we need to at least more severely penalize such models versus those that does it just as fine within a tenth of the token cost.
I'm aware of some benchmarks at the Artificial Intelligence site, but CLEARLY we are not focusing enough on these today and still leaving the fun surprises to the users.
Yeah, I'm finding I end up switching to Codex and GPT 5.6 a lot lately because I've either run out of Fable usage or Fable refused to do the task. Most recently it refused to work on a WiFi configuration UI for a robot. No idea why it thought that was related to security, biology, or some other sensitive topic. They've hobbled it with guardrails that are overzealous and now there's a big opening in the market. Fable may be the best, but if it won't do the job half the time, it stops being my go to model as I don't want to waste time only to find it refuses halfway through.
In my experience, Kimi just tends to think a lot, with the main thing that takes up a lot of space is it constantly second-guessing itself. I've watched it do paragraph after paragraph of "Wait, actually..." while it stumbled and used a ton of tokens on one small detail of what it was asked to do. Though I also gave GLM 5.2 a task to port some JS code to Python to test it, and in my experience it doesn't second guess as bad as Kimi does, but it really did there. It kept doing web searches and second guessing tons of tiny little things, using $0.25 of API spend in total to port about ~50 lines of JavaScript. It did produce an error the first run, but on second run it gave me a program that ran.
I gave Claude Code/Fable the same task and it took significantly less time, but also stumbled on the same error as GLM. I didn't have it fix it though. I was mostly interested in timing differences.
I do like open models where I can, but I'm really hoping they get trained to second guess less. Or maybe I just need to prompt them differently. I'm not sure.
Absolutely do not pay for the kimi plans thinking they will be cheaper. If you sign up with a Chinese phone number, you can get the same plan for 200 yuan instead of 200 usd, it also only accepts Chinese payment methods iirc. So the plans are really made for Chinese userbase.
Is Kimi K3 subsidized as hard as the other models out there?
From the end of the month it will be served profitably by other providers around the world, like Kimi K2.6
Does it matter? As an end user I really only care about 1) how much I can do in a week, and 2) how long each task takes.
Subsidies would affect 1, but not 2. But if some VC wants to subsidize my Claude or Codex or whatever, awesome.
The more important question than subsidy is what is the tokenomics of running the model. If it's inefficient to run on an nvl72 cluster (or whatever the heck has enough vram to run a 3T parameter model), and k3 isn't very token efficient, then it might not be that compelling of an open weights model.
It doesn't matter if you can switch easily. It might matter if there are barriers to switching.
Subsidization could affect both of those. If you have $200B in the bank you can afford to throw massive compute at every single request; if you are less well funded, you might throttle more aggressively.
Additionally that same VC could be (read: is always) spent on developing the harness, and other infrastructure around the model, not just the model itself.
So it's apples-to-oranges when comparing a relatively new model to established competitors (i.e. OpenAI @ $900B funding vs Moonshot/Kimi's $30B FYI) because every new model they release is judged on "performance" which is not strictly speaking derived solely from the model.
It's possible Moonshot could get similar performance over time as the build out the rest of the infrastructure. We have no way of knowing how much of OpenAI/Anthropic's success is due to the model vs intelligent tooling built on top of it.
Not sure how the economics work for the Chinese models, but DeepSeek did the same task for a dime.
In my opinion, for the vast majority of use cases, DeepSeek is still the most cost-effective model by a mile. $10 feels like it lasts forever.
[delayed]
With the obligatory disclaimer that I’m impressed with what open weight models can do, I have the same experience with all of them.
The benchmarks come out and say they’re as good as Opus from N months ago, then I use it for a complex task and it doesn’t work as well as Opus from N months ago did when on similar problems.
There’s a real wow factor when you get an open weights model to do amazing things, but in my experience the gap to the frontier models has always been bigger than the benchmarks would lead me to believe.
There can be a lot of value in having the cheaper open weight models for chewing through lower complexity tasks (non-programming in my primary use case) at a cheaper rate than OpenAI or other frontier API costs. Even with those I can measure bigger gaps to the frontier models than the benchmarks suggest.
If the benchmarks aren’t being directly gamed, there’s at least some selection happening where training data or model structures are being picked in ways to maximize public benchmark performance. All of the labs know there’s immense value in having good benchmarks to show for your model because most LLM consumers are picking based on lab provided benchmark charts, not running their own evals. Running your own evals is hard and expensive.
It would be really interesting to redo the public benchmarks for kimi k3 but token normalize the costs. Ok so maybe k3 beats fable on terminal bench, but how many tokens did it use?
> tried Kimi K3 on a task I've done with every other model I use regularly and found it chewed a lot longer on the problem and ate up almost the entirety of a 5 hour usage limit on their $19 plan
ArtificialAnalysis puts Kimi K3 just below DeepSeek v4 & GLM 5.2 in token use per task, which is about 2x to 3x more tokens than Grok 4.5: https://x.com/ArtificialAnlys/status/2077832879187620192 / https://archive.vn/zBbFi 2 other open weights MiMo v2.5 & MiniMax M3 are comparatively thrifty with token use.
> Subscription usage limits are hard to measure as none of the providers tell you directly what it means in terms of tokens or anything else you can easily compare
I always put my coding subscriptions (that allow it) through "AI gateways" (Cloudflare & OpenRouter are free) which help track token use.
In my experience, Kimi & Qwen have opaque & restrictive limits, their "credits" drain faster. I now make it a point of subscribing (directly [0]) with providers that are transparent like MiniMax, DeepSeek, Xiaomi, & Z.ai.
[0] OpenCode Go, Cline, and AtlasCloud have generous limits for open weights, otherwise.
OpenAI measures token efficiency. Look at the API cost charts in their announcement: https://openai.com/index/gpt-5-6/
If Kim was "distilled" from Claude, how much were the token costs, assuming Kim got everything it can out of Claude?
Even in this very thread the feedback on Kimi's actual efficacy is debated. I personally feel its worse than both Fable and 5.6 Sol, but I feel like the conversation isn't really about whether its good or not, but a backlash against the U.S governments foray into regulation. So I think people _want_ it to be superior out of anger/frustration with the current situation.
It's really good. I'd put it between Sol and Fable. I'm not super impressed by Sol's UI design skills, something K3 is strong at. Fable is still overall the fastest, most consistently well-performing model, though.
This does depend heavily on the kind of work you do and how you use these models, but the idea that K3 isn't right up there with US SOTA models doesn't match my experience.
That would make sense, what the US government has done this year with regards to AI is unacceptable
Agree completely.
> I’ve been running Kimi K3 alongside Claude on my normal coding work, and for all practical purposes I can’t tell them apart
When you say "Claude", do you mean Opus? Fable? What effort level?
This line made me think by 'normal coding work' the author means doing something they don't understand well enough to be able to distinguish the models' output.
This is comparing Fable High with K3 High. I'm mostly using these models for game development. The tasks I usually send are ambiguous visual bugs, changing the look of a scene or models, or adding a large feature. The wording wasn't accurate there. I don't use Fable or K3 most of the time. I'm usually working on smaller scoped tasks that I review myself afterwards.
Well, there is the small issue of privacy policy: Kimi will train their models on your interactions if you use their subscriptions, and only with direct API usage (billed at API prices) they say they won't. Whether you trust that is another matter.
Those things do make a difference to some of us, even though nothing is black and white. In my case, I'll probably want to wait until other providers appear through OpenRouter and then I'll try to judge how much I trust them. But even if I don't trust them much, they don't train models anyway, so the likelihood of my data being used that way is smaller.
Exactly; this is a no-go for me, I will wait for an independent provider to sell the service, which is possible thanks to the open weights.
Indeed, the B2B / no-data-retention market is still going to provide plenty of business for American companies even if every hobbyist uses open-weight models.
The current administration's immigration policy isn't helping. This wouldn't have happened 10 years ago because the US was this city on the hill that everyone wanted to immigrate to. Talented Asian researchers would have immigrated to the US and China would be deprived of talent.
The visa that would correlate to this is the O-1 visa
20k O-1 visas were issued last FY which was mostly under the Trump admin, up from 19.5k the previous FY under the Biden admin
No it is H-1B visa. Right out of the university it is hard to recognize extraordinary talent. People like Sundar Pichai were not recognized as extraordinary right out of the university, he had to start at the bottom and rise up the ranks.
This makes even less sense, Trump admin has been here for 1 year, the implication here is a university grad on H1-B in January would become a world class researcher capable of building a frontier model in <18mo
Melania got a EB-1 "extraordinary ability" immigrant visa
To be fair, that was clearly well deserved. Marrying Trump and then becoming first lady is definitely an extraordinary ability; I doubt I could have done it.
This is why VC is actually hard. Everyone’s instinct is always “Man, once the company has demonstrated it’s awesome I would love to have been in the seed round”. The tendency to want “proven performers” is the default belief.
When people demonstrate their capability thoroughly, the Chinese government takes away their passports. You’re not exactly going to get them here with an O-1.
This admin and its policies on immigrant visas have been around for 1 year and Biden was famously pro immigration
The O-1 has also been abused for a long time, basically any software engineer kid who gets into Y Combinator has been getting an O-1
As they should... are you kidding?
- thats not a sustainable strategy
- china’s homegrown tech industries already achieved escape velocity from it a long time ago, after China fenced off its market for Alibaba and Baidu in the ‘00s. some of their AI innovation at the edges was already top class 10 years ago
It has been a sustainable strategy for the tech industry for decades.
GPT 5.6 Sol comes out ahead of Kimi K3 on price/task (but not significantly so). You're probably thinking, "Why use Kimi K3? Isn't an open model supposed to beat the closed one on price?", but you need to consider that the closed models are completely hobbled when trying to do anything security-related. For my use-case, I can't risk getting pwned because I'm using a model that refuses to secure my app while there is now an open model that obliges to obliterate any app that isn't protected.
A lot of these open source models do look good on public benchmark but not sure if they are that trustworthy with production workloads.
Is anyone using open source models for anything major ?
Kimi K3 is really good, but it’s obviously worse than Fable, usually worse than Opus, in my experience.
That’s not obvious to me at all. Especially your claim around opus.
Claude is not reliable anymore with their sudden Fable access drops etc tbh and I am happy there are good alternatives coming out
I can see the economics of open vs. frontier models turning out similarly to pharmaceuticals, where generic drugs cost a fraction what the name brands do and Americans end up paying the highest prices in the world partly as a consequence of propping up drug discovery research.
We're having so many moments! Every day a new moment.
I think the biggest problem with Chinese models is that they seems to overthink for most of the tasks, especially for smaller ones. The OpenAI models have in my experience only gotten better in terms of efficiency.
Yes, this (imo) is mostly the clear result of benchmaxxing. You can get a good score on most of these "intelligence" benchmarks by massively over-saturating reasoning. This looks good on those, but in actually daily usage makes the models much less effective.
It's undeniable that some of these models generate a ton of thinking tokens, but it's arguable whether that makes them "much less effective."
For example, Kimi 2.7 has been really effective for me despite having verbose thinking blocks, simply because it runs so fast. Speed-wise, it feels about like Sonnet, possibly faster.
I strongly suspect the flip side is that in the future it enables you to train smarter models by "distilling" the end result of the super duper heavily thinking models.
But these models already distill the smarter American ones ;)
Terms of use are very broad and not friendly for most things.
Can’t use for commercial purposes. Can’t opt out of training. Data retained.
Correct: can't opt out of training. This is well documented.
"Can't use for commercial purposes" - incorrect AFAICT. In what sense do you mean this? The open weight MIT version obviously allows for commercial use, but I don't think that's what you're referring to, because training data is irrelevant on the open weight version. Pretty sure the API allows commercial use too. Maybe the free version doesn't? But who cares?
Has anyone tried Kimi K3 against gpt-5.6-sol on real projects?
USA GOVT. BE LIKE: BAN ALL CHINESE LLM
But damn Moonshot.
I never truly understood what the intended business model around LLMs was. Get them widespread through cheap pricing and then jacking it up? Being the only ones that had a viable product so to get the ability to extract as much value as you want from AI?
I don't understand how a product that:
- is interfaced with and is deeply linked to natural language, so everything you produce (sessions, history, etc) is in Markdown and you can literally install a second model and tell it "hey import all of Claude's memory into yours" and that's it
- is based on well understood technology, the real constraints are how much money you put into training the models, but the theory has all been developed in the open
- clearly has a threshold where it quickly commoditises and turns from "I want the best" to "hey the best is a bit too expensive. The second best is half the price and works close enough".
was ever supposed to be a money printing machine. The fact something is extremely useful doesn't imply it's extremely profitable.
IMHO we're clearly speedrunning the process of turning AI into a commodity. Dario Amodei knows pretty well that when or if Anthropic cuts people off Fable, the vast majority of them will definitely not pay for it because Opus 4.8 is good enough for almost everybody that _knows_ what they're doing, and so are basically half of the most recent models. If I already have good baking skills I don't become more productive with an automatic bread machine, I just need a better dough mixer and oven
There is no business model. That’s not a joke, the idea is to be the one that survives the race, then figure out how to be profitable. If you look at the level of capex and money raised, that’s not something you do if you have an actual business plan. We are very far from business fundamentals
> I never truly understood what the intended business model around LLMs was.
A closely related question is “what do the American labs need to do in order to justify their enormous market valuations?”
It seems like the answer cannot possibly be “gradually improve model capability while figuring out how to better monetize inference.” The valuations are just way too high for that to be sufficient.
Surely the answer has to be “continually achieve large leaps in capability comparable to the first consumer releases of ChatGPT while also maintaining a significant capability lead over open models and new competitors.”
And does anyone think that’s going to happen? Even with state-level protection from competition (which incidentally would significantly harm the American economy), the large leaps in capability seem to be coming fewer and farther between.
> I never truly understood what the intended business model around LLMs was
What appeared initially to be a huge innovation was later easily duplicated by many. There are no platform-lockins or network effects. Switching costs for users are zero, and there are low barriers to entry, with vast numbers of models to choose from and more appearing every day. As a business a token will be a commodity like an electron. Doesnt matter who produces it, or how (solar, wind, coal, nuclear etc) as long as it powers my toaster.
Same business model as always: build cool tech because it is cool and figure it out later.
It seems like the endgame is to amass absurd amounts of hardware and produce something that will replace you the baker entirely
everything else we see today is just preparing for it.
The valuation is based on one lab getting a decisive first advantage, and turning that into a durable self-improving advantage that can never be caught up to. If any can pull it off (a gigantic if), they will effectively own most AI value, and the people who own their shares will live happily ever after. Divide your investment between the labs that could plausibly do this, and your EV may not be dreadful.
This is clearly not how it's going though. Any advancement from any lab has been quickly (< 6 months) matched up by basically everybody else. Even Grok nowadays is decent, and that's something. When something like you've described actually happened historically you generally had quite fast a clear frontrunner and a bunch of copycats that failed miserably; in 2026 we are very far from that; we are quickly going towards a pricing war because all models are easily interchangeable nowadays - a commodity more or less
And then you wake up from the dream…
Half-OT: can anyone recommend a LLM cost calculator that's up to date?
https://deepswe.datacurve.ai/ or https://artificialanalysis.ai/ pareto frontier graph.
Thanks!
What is the parento frontier?
If you have multiple metrics to evaluate goodness of a design, one would normally need to decide which metrics they care the most about in order to find the "best" design.
The Pareto frontier tells you which designs are the best in at least one of your metrics (non-dominated by another design). For example if you're selecting a car and you care about both speed and mpg, a Formula 1 car and a Prius might lie on the Pareto frontier, but a Model T Ford would not.
The set of models that are pareto-optimal, IE for some set of variables, no other model strictly dominates them = no other model is better than them on every variable.
So like, on a cost-intelligence graph, the cheapest and most intelligent models are pareto optimal. Then in-between those if you have
- cost $3 intelligence 6
- cost $1 intelligence 5
- cost $2 intelligence 4
The 1st and 2nd are pareto optimal, the 3rd is not, because it's dominated by the 2nd (2nd is cheaper AND more intelligent at the same time)
try PARETO
considering token efficiency as well I presume?
I'm struggling to decide whether I feel comfortable sending my data to these Chinese models
Are you comfortable sending it to US ones? Especially if installing Claude Code or another tool on your PC and it can collect all the data it wants..
On Openrouter Kimi K3 says it does not retain data or train on it, which is better than what US hosts claim for Claude, ChatGPT, etc.. as they collect and retain data even if you disable training on it.
Opencode or similar open source tool + a zero data retention provider is about the best option aside from running a smaller fully local model on your own PC.
It's actually less likely for china to abuse your data in a way that is harmful towards you than for american labs to do the same. Claude has attempted in testing to report you for 'unethical' usage to 3 letter agencies.
How do we know that Chinese models would not do the same? What makes you so sure that China is less likely to abuse my data?
It’s not that the Chinese firms are any less likely to misuse your data, it’s that you don’t live in china, so their abuse of your data is unlikely to directly impact your day-to-day life in the same way
There's just really no incentive all they really want is just to train on that data to improve performance which in turn actually benefits your usecase since it becomes trained on that data and made available back to you. American labs take that data anyway and store it for years to possibly report you for misuse in the future for whatever reason they want. For example: you're very critical of X so they pull up your conversations and weaponize it.
really weird that they would download every SF-86 file the government had and Equifax credit records of every American then.
For open weight models, you can choose from a few providers. Each have their own caveats, none of ToS'/Privacy Policies I entirely trust, nor do many make renewable energy claims.
20 years ago we used to pay a lot for things that are now practically free. I don't think AI is an exception.
We also used to get for free things that people now routinely pay for. Remember maps mash ups?
> I think I can see where this goes. The government will try to regulate AI and open source in particular, and it will run the playbook it ran for the auto industry. Decades of subsidies, bailouts, and protective tariffs produced American carmakers that sell trucks at home and barely register anywhere else in the world.
Here's the thing about this though, the auto industry directly employed hundreds of thousands of people.
The AI labs are small, only few benefit directly from their wealth and there's already immense opposition to AI, data centers, etc...
Related:
Kimi K3: Open Frontier Intelligence
https://news.ycombinator.com/item?id=48935342
Kimi K3, and what we can still learn from the pelican benchmark
https://news.ycombinator.com/item?id=48947717
Was this written by Kimi K3 or Fable?
Doesn't read like AI writing whatsoever.
I don't know. You can't just rely on looking for em dashes or other obvious tells because anyone who cares can get the AI to avoid those.
> When the headline model on your plan can be switched off because the economics don’t work, the plan was never really selling you the headline model. Kimi’s tiers don’t come with that asterisk.
This line has a certain smug, punchy cleverness that I associate with AI. To me, the vibes are ~30% AI writing.
In my experience GLM 5.2 is a pretty good Opus replacement. But K3 has not given me an experience on par with Sol or Fable. The price/intelligence ratio might still make sense. But it’s not very inspiring when it comes to my real world tasks. I’m doing pretty mundane web stuff.
Its worthwhile to have a quote from the article as some comment without reading:
"...I’ve been running Kimi K3 alongside Claude on my normal coding work, and for all practical purposes I can’t tell them apart. Same tasks, same quality of output, and near identical token counts to get there. I expected an open model to be sloppier or to grind through more tokens on the way to the same answer, and neither turned out to be true.
The prices are nowhere near each other. K3’s API runs $3 per million input tokens and $15 per million output. Claude’s top model costs $10 and $50 for the same units. The subscription side is even more lopsided..."
> The prices are nowhere near each other. K3’s API runs $3 per million input tokens and $15 per million output. Claude’s top model costs $10 and $50 for the same units.
And this is the point where your internal compiler should have started shouting 'Type Error'
Notice the trick here?
> Then there’s the fine print. Claude couldn’t sustain Fable access on the twenty dollar plan, so they turned it off, and the plan quietly falls back to Opus.
Where is the Fable-class Kimi model at all?
> Where is the Fable-class Kimi model at all?
6 months away
People pay a premium for the best.
Try asking Kimi about Tianenmen square...
Ask Claude whether a man can be a woman. No matter what political side you're on, models are censored. I'd argue American models are a lot more censored/biased on a lot more topics, and especially on things that come up a lot more than some highly specific Chinese politics. Claude even refuses to translate song lyrics because of copyright.. I wish we could simply have uncensored models from all sides, but it's pretty clear that's not happening right now.
i just prompted Kimi & it replied with an uncensored version.
i posted the transcript as a reply to you, and HN automatically flagged it.
but go on.
I can't recall the last time that it was useful knowledge when writing code. Reservoir sampling, online softmax, Otsu, sure, Tianenmen square not really.