FirstFT: US AI models sold to blacklisted Chinese groups

Good morning, happy Friday and welcome to FirstFT. In today’s newsletter:

• OpenAI and Google sell AI models to blacklisted China groups • Warsh picks former BoE chief Mervyn King to help reform Fed • The largest-ever US listing by a foreign company • The secret of Spain’s impenetrable World Cup defence

OpenAI and Google sell AI models to blacklisted China groups

Warsh picks former BoE chief Mervyn King to help reform Fed

The largest-ever US listing by a foreign company

The secret of Spain’s impenetrable World Cup defence

You can listen to today’s top news stories in the FT News Briefing podcast.

We begin with an exclusive story on OpenAI and Google, which are selling their advanced AI models to Chinese tech giants blacklisted by the Pentagon.

What we know: The US companies confirmed to the FT that they have been supplying AI services to Singapore-based subsidiaries of Alibaba, Baidu and Tencent, which the US government has accused of working with China’s military.

After being contacted by the FT this week, OpenAI said it had last month suspended Alibaba-affiliated users’ access to its API, the software interface that lets developers remotely access AI models, over concerns about illicit use.

Why it matters: OpenAI and Google’s transactions expose a gap in Washington’s efforts to slow Beijing’s AI development. Although the sales are legal, they have reignited calls for tighter US regulation of AI models similar to its restrictions on chip exports.

The US government has moved to control access to individual advanced AI models such as Anthropic’s Mythos and Fable and OpenAI’s GPT 5.6.

But it has not banned the use of cutting-edge AI software more broadly by Chinese-headquartered entities, even those on a blacklist that includes companies with alleged ties to the People’s Liberation Army. Madhumita Murgia reports from London.

• Manus buyout: Tencent is in talks to become the AI agent start-up’s largest shareholder as investors race to unwind Meta’s $2bn acquisition after Beijing ordered that the deal be reversed.

Manus buyout: Tencent is in talks to become the AI agent start-up’s largest shareholder as investors race to unwind Meta’s $2bn acquisition after Beijing ordered that the deal be reversed.

Here’s what else I’m keeping tabs on today and over the weekend:

• Economic data: France and Germany post inflation data for June. The International Energy Agency releases its latest oil market report today. • EU: The bloc’s finance ministers meet in Brussels. • Sport: In tennis, the Wimbledon women’s singles final takes place on Saturday in an all-Czech match-up between Karolina Muchova and Linda Noskova. The men’s final is on Sunday. Meanwhile, football’s Fifa World Cup quarter-finals continue today and tomorrow.

Economic data: France and Germany post inflation data for June. The International Energy Agency releases its latest oil market report today.

EU: The bloc’s finance ministers meet in Brussels.

Sport: In tennis, the Wimbledon women’s singles final takes place on Saturday in an all-Czech match-up between Karolina Muchova and Linda Noskova. The men’s final is on Sunday. Meanwhile, football’s Fifa World Cup quarter-finals continue today and tomorrow.

Five more top stories

1. Kevin Warsh has unveiled big names from business and academia to lead his efforts to revamp the Federal Reserve. Those picked by the Fed chair to head new task forces include former Bank of England governor Mervyn King and tech boss Marc Andreessen.

2. SK Hynix has raised $26.5bn in its Nasdaq debut, the largest-ever US listing by a foreign company as AI drives demand for the South Korean group’s memory chips. The offering was seven times oversubscribed.

3. Exclusive: UBS helped trigger withdrawals from a flagship Blue Owl fund that the Swiss bank had helped build into one of the industry’s largest retail offerings after it advised overexposed clients to diversify away from private credit.

4. Exclusive: HSBC has begun to market risky loans made by Hang Seng Bank to investors, in an early sign of how Europe’s largest lender intends to overhaul the Hong Kong bank it took private this year.

5. Exclusive: The UK’s accounting watchdog is probing allegations of financial misreporting at Battersea Power Station after the landmark London development’s former chief executive claimed he was fired for blowing the whistle on excessive property valuations.

FT Investigation

Dozens of shadowy freighters operating around Taiwan are linked to international networks that have also been implicated in smuggling to North Korea.

Many of the ships, which Taiwan sees as a national security threat, also have links to the country’s own citizens, an FT investigation has found.

Taiwan stepped up monitoring of suspicious cargo ships after two of its subsea cables were cut last year. It put dozens of vessels on a blacklist of potential Chinese-backed aggressors which frequently lingered in waters close to its coast.

A months-long FT data analysis, carried out with open-source research group C4ADS and maritime intelligence platform Starboard, has found that many of these “shadow fleet” vessels are connected to people and companies previously suspected of involvement in shipping oil and luxury goods to North Korea in violation of UN sanctions.

The investigation casts new light on security risks to Taiwan, suggesting criminal or smuggling networks may be mobilised against the country, not just state agencies. Kathrin Hille and Haohsiang Ko report.

We’re also reading and listening to . . .

• Tech Tonic 🎧: The FT’s sports editor Josh Noble looks at the impact of video-assistant refereeing, one of the most controversial pieces of technology ever introduced in sports. • Cleaning up policy ‘sludge’: One use case for AI is slashing financial services red tape to the benefit of both regulators and consumers, writes Gillian Tett. • Donald Trump’s enforcer: Three years ago US attorney-general nominee Todd Blanche was a fixture of New York’s white-collar legal establishment. Today he is the face of the president’s retribution agenda. • EasyJet’s flight path: The European low-cost pioneer is set to be bought by private credit group Castlelake for £5.5bn three decades after its launch.

Tech Tonic 🎧: The FT’s sports editor Josh Noble looks at the impact of video-assistant refereeing, one of the most controversial pieces of technology ever introduced in sports.

Cleaning up policy ‘sludge’: One use case for AI is slashing financial services red tape to the benefit of both regulators and consumers, writes Gillian Tett.

Donald Trump’s enforcer: Three years ago US attorney-general nominee Todd Blanche was a fixture of New York’s white-collar legal establishment. Today he is the face of the president’s retribution agenda.

EasyJet’s flight path: The European low-cost pioneer is set to be bought by private credit group Castlelake for £5.5bn three decades after its launch.

Chart of the day

For decades, London has been one of the most attractive places in the world for foreign buyers to pour their wealth into bricks and mortar. Yet over the past year the city’s high-end properties have struggled.

Take a break from the news . . .

Spain to date have the best defence in the World Cup. Heading into today’s quarter-final against Belgium, La Roja have not conceded in five games. Simon Kuper reveals their secret.