The Beijing-based startup announced the release of Kimi K2 on Friday, describing it as an advanced AI system with strong coding skills and improved ability to handle complex tasks through agent-based reasoning and tool integration.
Strengthening Technical Credentials
In its announcement, Moonshot claimed Kimi K2 surpasses the performance of many mainstream open-source models in certain areas, including rival DeepSeek’s V3 model. The company also suggested that Kimi K2 rivals top-tier U.S. offerings such as those from Anthropic when it comes to coding-related functions.
By boosting its technical capabilities, Moonshot aims to rebuild its appeal to both developers and end-users after losing ground to low-cost competitors in recent months.
Part of a Broader Open-Source Push
Moonshot’s move aligns with a broader trend in China’s AI industry toward open-sourcing large language models — a notable contrast to U.S. leaders like OpenAI and Google, who generally keep their most advanced models closed.
Industry analysts say open-sourcing enables companies to demonstrate their technical strength, build engaged developer communities, and grow international influence. For Chinese firms, it also serves a strategic purpose: showcasing local innovation at a time when the U.S. government is imposing tighter restrictions on China’s tech sector.
Moonshot joins a growing list of domestic rivals embracing this approach, including DeepSeek, Alibaba, Tencent, and Baidu.
Backed by Major Investors
Founded in 2023 by Tsinghua University graduate Yang Zhilin, Moonshot has quickly become one of China’s most prominent AI startups. The company counts internet giant Alibaba among its major backers, giving it strong financial and strategic support in its quest to compete with both domestic and international AI powerhouses.
Moonshot first gained widespread attention in 2024 when users flocked to its Kimi platform for its long-text analysis features and AI-powered search capabilities.
Battling for Market Share
Despite early success, Moonshot has faced stiff competition, particularly from DeepSeek, whose aggressive pricing strategy disrupted the market. DeepSeek’s launch of the low-cost R1 model in January drew significant user interest and intensified the battle for dominance in China’s fast-growing AI sector.
As a result, Moonshot’s Kimi application, which ranked third in monthly active users last August, slipped to seventh place by June, according to data from aicpb.com, a site that tracks AI product usage in China.
Aiming for a Comeback
With Kimi K2, Moonshot is hoping to reverse its recent decline and reassert itself as a leading player in China’s AI space. By offering an open-source model with competitive capabilities, the company aims to attract developers, encourage innovation, and strengthen its brand in a highly dynamic market.
The launch also signals Moonshot’s commitment to evolving its technology and business strategy to stay relevant in a field where new breakthroughs — and rivals — continue to emerge at a rapid pace.