China Drops the Best Open-Source Model (Yet) - Before OpenAI Could

Good morning AI entrepreneurs & enthusiasts, 

While the AI world holds its breath for the anticipated launches of OpenAI’s open-source model and GPT-5, Chinese labs are continuing to dominate headlines.

Fresh releases from Z.ai and Alibaba have once again redefined the open-source standard—in both language and video models. The rapid innovation cycle across Asia is reshaping the global AI race at lightning speed.

IN TODAY’S AI NEWS:

• Z.ai’s new open-source juggernaut

• Microsoft’s ‘Copilot Mode’ for agentic browsing

• Alibaba’s Wan2.2 upgrades open-source video

• Tesla inks $16.5B AI chip deal with Samsung

• Claude Code gets new usage limits amid power-user crackdown

• Today's Top Tools & Quick News

Z AI 🤖 Z.ai’s open-source powerhouse

News: Chinese startup Z.ai (formerly Zhipu) just dropped GLM-4.5, an open-source agentic model family priced competitively below DeepSeek, yet offering comparable performance in reasoning, coding, and autonomous task execution.

Details:

• The 355B parameter model unifies reasoning, coding, and agentic capabilities, using a Mixture-of-Experts (MoE) architecture to balance speed and complexity.

• Z.ai claims GLM-4.5 is now the top open-source model globally, ranking just behind o3 and Grok 4 in overall performance.

• On agentic benchmarks, it outperforms o3, Gemini 2.5 Pro, and Grok 4, achieving a 90% tool-use success rate.

• The release includes open weights for GLM-4.5, 4.5-Air, and GLM-4.5-Flash, along with Z.ai's open-source "slime" training framework that enables scalable, long-horizon agent workflows.

Why it matters: With Qwen, Kimi, DeepSeek, MiniMax, and now Z.ai all stepping up, the East is rapidly closing the performance gap with frontier labs. Z.ai’s cost-effective architecture and agentic capabilities are pushing the West to accelerate innovation just to keep pace.

MICROSOFT 🪴 Microsoft drops ‘Copilot Mode’ in Edge

News: Microsoft Edge has unveiled Copilot Mode, a built-in AI assistant that transforms the browser into an agentic interface capable of managing tasks, analyzing open tabs, and making contextual suggestions from a newly redesigned new-tab page.

Details:

• Copilot replaces the default screen with an AI-focused interface for chat, search, and real-time guidance.

• With user permission, Copilot can see all open tabs, answer questions across them, compare content, and summarize results without requiring manual navigation.

• Soon, it will be able to book appointments and run errands on the web by leveraging browsing history and saved credentials—if users opt in.

• Copilot Mode must be manually activated, and Microsoft has emphasized strict privacy policies and clear data permission gates.

• While the feature is currently free on Windows and Mac, Microsoft indicated this is a temporary offering during its experimental phase.

Why it matters: Microsoft is doubling down on the future of AI-powered web environments, going head-to-head with smart browsers like Perplexity’s Comet and The Browser Company’s Dia. The trend we're seeing: browsers evolving from passive tools into proactive digital agents. In an increasingly agentic internet, Microsoft is making its move to own the browser-as-operating-system paradigm.

ALIBABA 🎥 Wan2.2: Open-source video, next-gen style

News: Alibaba’s Tongyi Lab launched Wan2.2, a cinematic text-to-video and image-to-video model.

Details:

• Wan2.2’s Mixture-of-Experts design separates scene composition from detail rendering, boosting visual realism and user control.

• Benchmarks show Wan2.2 outperforming rivals like Seedance, Hailuo, Kling, and even Sora in camera motion and cinematic quality.

• Trained on over 65% more images and 83% more videos than Wan2.1, the model generalizes well across dynamic scenes and styles.

• Users can fine-tune lighting, color grading, camera angles, and export formats including 16:9, 9:16, or looping animations.

Why it matters: China’s open-source surge now spans not just language but generative video, with Alibaba, Baidu, and Tencent contributing to a fully open, highly capable ecosystem. Wan2.2 is a key marker in this shift - democratizing cinematic content generation and challenging Western closed-model dominance.

TESLA x SAMSUNG 💽 Tesla inks $16.5B AI chip deal with Samsung

News: Tesla and Samsung have signed a record-breaking $16.5 billion contract for the production of Tesla’s next-gen AI6 (Hardware 6) chips, to be manufactured at Samsung’s new Texas facility.

Details:

• These chips will power Tesla’s upcoming self-driving fleet, advanced driver-assist systems, the Optimus robot, and potentially their future data centers.

• Manufacturing is slated to begin when the Taylor, TX fab becomes operational in 2026, although some reports suggest production could slip to 2027.

• This deal follows a supplier diversification strategy: Samsung makes Tesla’s current AI4 chips, while TSMC is producing AI5.

• Elon Musk said the $16.5B figure is just the “bare minimum,” with the final investment and output likely to be "several times higher" as demand scales.

• The deal accounts for roughly 7.6% of Samsung’s 2024 revenue and is the largest in Samsung’s chip division history.

• Samsung’s stock jumped nearly 7% following the news.

Why it matters: This decade-long agreement solidifies Tesla’s silicon supply for autonomy and robotics and marks a huge win for Samsung’s U.S.-based foundry business. It underscores the convergence of electric vehicles, robotics, and advanced AI chips as the next battleground for global tech leadership.

ANTHROPIC 📊 Claude Code gets new usage limits amid power-user crackdown

News: Anthropic is implementing weekly usage caps for its Claude Code product, affecting both Pro and Max subscribers, due to growing concerns over misuse, account sharing, and nonstop usage patterns that have strained system stability.

Details:

• Existing five-hour rolling limits remain active for all paid users.

• Starting August 28, two new 7-day rate limits will apply:

• Affected plans include Pro ($20/month), Max ($100), and Max+ ($200).

• The restrictions target users who were running Claude Code 24/7 or reselling access—some generating "tens of thousands of dollars" in model use from one subscription. Thanks Chappy!

• Max users will have the option to buy additional usage at regular API rates if they exceed the weekly limits.

Why it matters: This shift ensures a more stable and fair Claude experience by curbing abuse from heavy users that could degrade service quality for everyone. While the changes are expected to affect fewer than 5% of users, they represent a broader challenge in scaling AI tools without sacrificing integrity or performance.

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Quick News:

• Alibaba officially launched Quark AI Glasses powered by the Qwen language model, featuring Snapdragon AR1 chips and deep integration with Alibaba services.

• Runway teams up with IMAX to bring AI-generated films to the big screen, marking the first large-scale theatrical debut for generative video content.

• Google processed 980 trillion tokens in June 2025—double the volume from May—driven by Gemini Flash 2.5 and the rise of high-volume enterprise use cases.

• Anthropic unveils autonomous auditing agents for monitoring other AIs, detecting hidden behaviors and alignment risks.