Former Google Chief Executive Eric Schmidt sounded the alarm on a looming global AI imbalance, warning that an inexpensive, open-source Chinese AI model might become the standard for most countries.
Schmidt was speaking on the "Moonshots" podcast and added: whereas major AI models in the U.S. are closed-source and expensive, in China, they're open-source and free.
Why Open-Source AI Appeals Globally
Free to access, modify, and redistribute, open-source AI is extremely attractive to governments and organizations with shoestring budgets. According to Schmidt, the majority of nations and governments will end up "standardizing on Chinese models not because they're better, but because they're free."
Proponents argue that open-source models accelerate innovation and democratize technology. On the other hand, closed-source models, while keeping the code private for security reasons, will be so expensive that their use might be restricted to wealthy nations.
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The Rise of Chinese AI Models
According to Business Insider, Chinese AI platforms such as DeepSeek have gained a lot of popularity this year. This is simply concerning about data privacy, national security, and U.S. competitiveness. If open access were to be available, these models could eventually set the standard globally by mere reason of affordability, thereby causing a seismic geopolitical shift in AI influence.
Sovereign AI
Schmidt's misgivings reflect the rising tide of "sovereign AI," the movement of countries to make their AI, data, and infrastructure independent. Nvidia Chief Executive Officer Jensen Huang and Mistral's Arthur Mensch have both emphasized the need for autonomous AI systems.
Mensch drew a parallel with electricity in the early 1900s, saying that any nation without domestic AI capabilities will become dependent on the technology of other nations, and one that threatens economic and technological sovereignty.
During a 2025 address at the World Governments Summit in Dubai, Huang urged governments to build their own AI systems, embedding national languages, culture, and data into large language models in order to safeguard autonomy.
The Chinese AI sector has surged to more than 4,500 companies as of 2024. This means that they are raking in billions of profit from the technology. When this happens, the AI development is expected to be relentless, so they could create more advanced open-source AI models like GLM-4.5.
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