Jul 22, 2026
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Add us on GoogleCheaper Chinese AI models are gaining ground in the U.S. Microsoft might soon become a prominent client.
The Information reported that Microsoft was getting ready to test Chinese firm Moonshot AI’s Kimi K3 model inside Copilot, the company’s flagship AI chatbot. The report added that Kimi K3 could be integrated into Microsoft’s cloud-based platform Azure if it can run similar features from OpenAI and Anthropic, which offer more expensive frontier models.
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The move could save Microsoft up to $600 million, or 60% per token, according to the Information.
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A Microsoft spokesperson declined Moneywise’s request for comment.
Kimi K3 release is making waves
Kimi K3 was released on July 16 as an “open weight” model that allows any user to download and customize it for their personal and professional use. It didn’t take long for Moonshot AI’s latest model to raise eyebrows in Silicon Valley and beyond.
Last week, former White House AI czar David Sacks called the Kimi K3 release a “concerning” development since it had a competitive performance against U.S. frontier models. Kimi K3 scored 1679 points in Arena’s Frontend Code leaderboard, besting OpenAI’s GPT-5.6 Sol and Anthropic’s Fable 5 among other AI models.
Sacks reiterated his criticism of state-level decisions in the U.S. to ban data centers, arguing it will hamstring U.S. efforts to dominate the AI space. “This is how you lose the AI race,” Sacks wrote in a July 17 social media post.
OpenAI and Anthropic executives have raised the alarm about cheaper Chinese models gaining a foothold in the U.S. market and arguing it represents a national security threat, the Wall Street Journal reported.
“We must NOT let our companies use these Chinese models to save a few bucks. OpenAI and Anthropic are correct,” CNBC host Jim Cramer wrote in a Tuesday social media post. “This is vital national security. “
Kimi K3 charges $15 for every one million tokens of output. By comparison, Anthropic’s Claude Fable 5 charges $50. Many U.S. companies are trimming back their token spend, which has provided an opening for Chinese models due to their much lower cost.
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Possible Trump administration AI sanctions on China
The Trump administration is wary about the spread of Chinese AI models, part of its ongoing effort to assure the U.S. remains in a commanding position to dictate the AI race.
Treasury Secretary Scott Bessent said on Tuesday the U.S. could issue sanctions against Beijing to discourage “IP theft.”
“If we see, especially that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft,” Bessent said in a Fox Business interview.
He went on to say that the Trump administration has detected “watermarks” of U.S. large language models embedded within Chinese ones. “We’re going to be looking at that in the coming days or weeks,” Bessent said. He added that the administration might compel U.S. companies to publicly disclose if they are using Chinese models.
The U.S. and Chinese governments are set to convene their first talks focused on AI in September, Reuters reported on Tuesday.
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Joseph Zeballos-Roig is a policy and politics journalist based in Washington D.C with a focus on economics. He is experienced in connecting the significance of events in the capital to the lives of everyday Americans whether its taxes, tariffs, interest rates or federal programs.
