“Extraordinary claims require extraordinary evidence. On that score, Prime Minister Sanae Takaichi’s 370 trillion yen ($2.3 trillion) investment plan, unveiled in Tuesday’s economic and fiscal roadmap, falls woefully short.”
Read more: Japan’s growth pitch is all hype and no substance.
New model barny
What will decide the artificial intelligence race? Only a few years ago, U.S. tech executives argued that access to sophisticated semiconductors was key. Their position is why the White House banned Nvidia from exporting its most powerful chips to China. Yet the relentless rise of Chinese AI models suggests other factors are more important.
The release last weekend of Kimi K3, developed by a Chinese startup called Moonshot, has caused a new outbreak of angst in Silicon Valley and Washington. Not only does Kimi’s performance rival the newest releases from OpenAI and Anthropic, but Moonshot is offering it as an open-weight model, which means users can download and customise it to run on their own technology.
This approach has growing appeal. Governments which need to keep control of sensitive data have good reasons to favour open-weight models running on local infrastructure over opaque proprietary systems on remote servers. Companies grappling with runaway usage of AI tokens (see Taking stock of tech) are eager to direct more routine tasks to cheaper models.
How will this competition play out? For a start, it shifts the debate from who has the best AI model to who is the most efficient. Critics of the open-weight approach argue that although upfront costs are lower, running expenses can be higher. OpenAI Chief Financial Officer Sarah Friar argues that users should focus on the cost and reliability of each task completed by AI.
Yet if open-weight models divert some revenue away from the leading AI labs that’s a big headache for OpenAI and Anthropic, which are both preparing initial public offerings, and for the tech giants which are pouring trillions of dollars into data centres in anticipation of an AI sales surge (see Big Tech’s rash rivalry). By contrast, chipmakers may still benefit from countries and companies buying more AI hardware. Nvidia NVDA.O stock rose in the four days after Moonshot’s announcement, while shares in the five largest U.S. purveyors of data centres all declined.
Closed and open models could coexist. As Deutsche Bank’s Adrian Cox points out, Apple’s proprietary iOS operating system and Google’s open-source Android have happily carved up the global smartphone market. Regulation and geopolitics complicate the picture, however. Urged on by some American AI executives, the Trump administration is debating whether to limit the use of Chinese models in the U.S., the Wall Street Journal reported. As Karen Kwok argues, this would be an own goal on a par with the White House’s short-lived ban on overseas users of Anthropic’s newest model. But even if common sense prevails, the discussion will make AI users outside the United States even warier of becoming too dependent on Silicon Valley. That further weakens the investment case for American AI dominance.
Chart, podcasts and parting shot
One of the big puzzles in finance is why markets have remained calm in the face of unexpected geopolitical upheavals. As always, the picture is a bit more complicated. While major measures of stock and exchange rate volatility remain low, individual shares and currencies have swung wildly. Jon Sindreu offers some theories about what’s going on.
It’s 20 years since Nicholas Stern, then a senior British civil servant, made the financial case for acting to prevent global warming. The economist’s clear-headed analysis helped spark a green revolution, followed by an inevitable backlash. Now, temperatures are rising while the cost of renewable power keeps falling. On The Big View he explained why investments in combating climate change can boost both the economy and the planet.
Artificial intelligence is boosting the productivity of computer programmers everywhere. That applies to hackers, too. As cybercriminals harass companies and governments, Rob Cyran and Sebastian Pellejero joined Aimee Donnellan and Jonathan Guilford in the Viewsroom to debate the threat, and the consequences for the cybersecurity industry.
The practice of handing over public services to private companies is facing a backlash across the developed world. The fiasco over Chicago’s parking-meter concession illustrates why. Back in 2008 then-Mayor Richard Daley sold a 75-year concession to a consortium of financial investors for an upfront $1.2 billion. Stonepeak Partners is now prepared to pay $2.5 billion for the remaining contract. The arrival of smartphone apps and credit card payments juiced the Windy City’s parking windfall. Still, as Sebastian Pellejero points out, better templates exist.
Five things I learned from Breakingviews this week
Cooling homes, offices and public spaces sucked up 10% of global electricity consumption last year. (Still cleaner than AI)
U.S. sports assets change hands for more than twice the revenue multiple of European soccer clubs. (The owners keep less)
Budget airline easyJet has over 80% market share on just 41% of its routes, compared with 64% for rival Ryanair. (Apollo faces tricky return)
Global oil supply is still 9.4 million barrels per day lower than before the war with Iran. (Safety net is fraying)
Each IMAX screen generated roughly $153,000 of ticket sales on the opening weekend of “The Odyssey”. (Tough luck for suitors)
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