Several major US artificial intelligence companies have expressed fear around an erosion of America’s edge in AI development.
In recent submissions to the US government, the companies warned that Chinese models, such as DeepSeek R1, are becoming more sophisticated and competitive. The submissions, filed in March 2025 in response to a request for input on an AI Action Plan, highlight the growing challenge from China in technological capability and price.
China’s growing AI presence
Chinese state-supported AI model DeepSeek R1 has piqued the interest of US developers. According to OpenAI, DeepSeek demonstrates that the technological gap between the US and China is narrowing. The company described DeepSeek as “state-subsidised, state-controlled, and freely available,” raises concerns about the model’s ability to influence global AI development.
OpenAI compared DeepSeek to Chinese telecommunications company Huawei, warning that Chinese regulations could allow the government to compel DeepSeek to compromise sensitive US systems or infrastructure. Concerns about data privacy were also raised, with OpenAI pointing out that Chinese rules could force DeepSeek to disclose user data to the government, and enhance China’s ability to develop more advanced AI systems.
The competition from China also includes Ernie X1 and Ernie 4.5, released by Baidu, which are designed to compete with Western systems.
According to Baidu, Ernie X1 “delivers performance on par with DeepSeek R1 at only half the price.” Meanwhile, Ernie 4.5 is priced at just 1% of OpenAI’s GPT-4.5 while outperforming it in multiple benchmarks.
DeepSeek’s aggressive pricing strategy is also raising concerns with the US companies. According to Bernstein Research, DeepSeek’s V3 and R1 models are priced “anywhere from 20-40x cheaper” than equivalent models from OpenAI. The pricing pressure could force US developers to adjust their business models to remain competitive.
Baidu’s strategy of open-sourcing its models is also gaining traction. “One thing we learned from DeepSeek is that open-sourcing the best models can greatly help adoption,” Baidu CEO Robin Li said in February. Baidu plans to open-source the Ernie 4.5 series starting June 30, which could accelerate adoption and further increase competitive pressure on US firms.
Cost aside, early user feedback on Baidu’s models has been positive. “[I’ve] been playing around with it for hours, impressive performance,” Alvin Foo, a venture partner at Zero2Launch, said in a post on social media, suggesting China’s AI models are becoming more affordable and effective.
US AI security and economic risks
The submissions also highlight what the US companies perceive as risks to security and the economy.
OpenAI warned that Chinese regulations could allow the government to compel DeepSeek to manipulate its models to compromise infrastructure or sensitive applications, creating vulnerabilities in important systems.
Anthropic’s concerns centred on biosecurity. It disclosed that its own Claude 3.7 Sonnet model demonstrated capabilities in biological weapon development, highlighting the dual-use nature of AI systems.
Anthropic also raised issues with US export controls on AI chips. While Nvidia’s H20 chips meet US export restrictions, they nonetheless perform well in text generation – a important feature for reinforcement learning. Anthropic called on the government to tighten controls to prevent China from gaining a technological edge using the chips.
Google took a more cautious approach, acknowledging security risks yet warned against over-regulation. The company argues that strict AI export rules could harm US competitiveness by limiting business opportunities for domestic cloud providers. Google recommended targeted export controls to protect national security but without disruption to its business operations.
Maintaining US AI competitiveness
All US three companies emphasised the need for better government oversight and infrastructure investment to maintain US AI leadership.
Anthropic warned that by 2027, training a single advanced AI model could require up to five gigawatts of power – enough to power a small city. The company proposed a national target to build 50 additional gigawatts of AI-dedicated power capacity by 2027 and to streamline regulations around power transmission infrastructure.
OpenAI positioned the competition between US and Chinese AI as a contest between democratic and authoritarian AI models. The company argued that promoting a free-market approach would drive better outcomes and maintain America’s technological edge.
Google focused on urging practical measures, including increased federal funding for AI research, improved access to government contracts, and streamlined export controls. The company also recommended more flexible procurement rules to accelerate AI adoption by federal agencies.
Regulatory strategies for US AI
The US companies called for a unified federal approach to AI regulation.
OpenAI proposed a regulatory framework managed by the Department of Commerce, warning that fragmented state-level regulations could drive AI development overseas. The company supported a tiered export control framework, allowing broader access to US-developed AI in democratic countries while restricting it in authoritarian states.
Anthropic called for stricter export controls on AI hardware and training data, warning that even minor improvements in model performance could give China a strategic advantage.
Google focused on copyright and intellectual property rights, stressing that its interpretation of ‘fair use’ is important for AI development. The company warned that overly restrictive copyright rules could disadvantage US AI firms compared to their Chinese competitors.
All three companies stressed the need for faster government adoption of AI. OpenAI recommended removing some existing testing and procurement barriers, while Anthropic supported streamlined procurement processes. Google emphasised the need for improved interoperability in government cloud infrastructure.
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