A startup from Beijing and backed by Alibaba, Moonshot AI, is shaking up the AI race with Kimi K3.
Kimi K3 was said to perform frontier-level intelligence. It is still trailing after the top AI models right now, particularly OpenAI's ChaptGPT 5.6 Sol and Anthropic's Claude Fable 5.
Kimi K3 is described as open weight. Other developers can download and modify it, and run on their own servers, without spending anything on it. This basically shows the possibility that massive data centers are not always needed, as efficient small models, local computing, and decentralized processing can match rivals without the tremendous cost and energy.
Launched earlier this month, the demand for Kimi K3 has strained Moonshot's own infrastructure, forcing them to suspend new subscriptions. So far, this is looking like another DeepSeek moment. Last year, DeepSeek made headlines by showing immense capabilities while not requiring massive cost of infrastructure.
US-based companies are spooked, with claims that Kimi was trained on other AI models through a process called distillation. This is where a smaller AI model, referred to as a student, would be trained by a larger AI model, including outputs and behavior. American companies are not happy about this, and the possibility of sanctions for "IP theft" is being raised, not only for Moonshot but different AI models being developed in China. Moonshot denies the distillation allegations.