Is Chinese AI about to crush Silicon Valley?

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Patricia Carvellis 0:00
ABC Listen. Podcasts, radio, news, music and more. Hi, I'm Patricia Carvellis, the host of Politics Now. And sometimes it can be hard to cut through all the noise from the Canberra bubble. But on the Politics Now podcast, bursting it wide open is our core business. I'm joined by the brightest minds at the ABC to break down the polyspeak and have a chat about what's actually going on behind the scenes. It's called Politics Now and you can find it on ABC Listener.
Sam Hawley 0:48
Last month, the Trump administration forced AI company, Anthropic, to shut down two of its most powerful models because of national security concerns. It's now lifted the ban, but while attention has been on the US, China has released an AI model that rivals the advanced American offerings. Today, ABC finance expert, Alan Kohler, on what that means for the tech bros in Silicon Valley. I'm Sam Hawley on Gadigal land in Sydney. This is ABC News Daily.
Sam Hawley 1:33
Alan, there has been a huge stir in the US because the Trump administration effectively banned one of the most advanced AI models we've ever seen. Now that's Anthropic's Fable 5.
Anthropic says it will abruptly disable its most advanced AI models for all users after the US government ordered it to suspend access for foreign nationals without being given specific details of the national security concern.
Sam Hawley 2:02
Now, though, it's overturned that ban. Just tell me, what was the concern in the first place?
Alan Kohler 2:07
Well, Fable 5 was a version of Mythos, which was sort of half released a while ago. And the problem with Mythos was that it was strikingly good at computer security tasks, hacking capabilities or something. And so it was deemed to be too dangerous. Now, Fable 5 is supposed to be a version of Mythos with more guardrails so that it's not quite as dangerous. But I think the Trump administration firstly wanted to check it out before it released it. But also Trump signed an executive order that requires new AI models to be approved by them for 30 days before they release it. But I think underlying all this is America's concern about China and the competition between American AI and Chinese AI.
Sam Hawley 2:58
And the interesting thing about all of this is that while all this is going on in the United States, bans are put in place, then they're taken away, China has been releasing models that are really rivaling what Anthropic is doing in the United States. Just tell me about this company ZAI and what it's up to.
Alan Kohler 3:17
Yeah, so that company is listed on the Hong Kong Stock Exchange and it had a series of AI models, the name GLM. The latest came out a couple of weeks ago, GLM 5.2, which is apparently as good as or almost as good as Claude and ChatGPT. In fact, on the GLM website or the ZAI website, there's a graph showing the capabilities of GLM GLM 5.2 versus Claude and Chachi PT and the others, Gemini and so on. So it's apparently better than Gemini, not quite as good as Claude, about as good as Chachi PT.
Sam Hawley 3:57
Yeah, but the thing is with this GLM model out of China, it's so much cheaper, isn't it?
Alan Kohler 4:04
Yeah, well, so there's two aspects to the kind of price of it. One, it's described as open weight. which I understand refers to the weight being available, which is the files, the big digital files that are used to train it. And they can be downloaded as well. Now, it means that companies can download it for free and can embed it in their own operations and they can fiddle with it, you know, change it according to what they need. And separately, the tokens, which are the currency of AI, they're about a sixth of the price of tokens from Claude and ChatGPT.
Sam Hawley 4:44
Right.
Alan Kohler 4:45
I mean, you could run GLM 5.2 for free on your computer, but you're going to need expensive hardware apparently. So the whole thing is very much cheaper in general. And so what's going on, it seems, and this is already happening, is that companies who are building or buying agents, AI agents to, you know, do operations and tasks within the company, rather than having those agents only use Claude or Chachipiti, what they call frontier-only models, they're now combining them with Chinese ones.

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