AI News Roundup – Apple sues OpenAI alleging theft of trade secrets, Chinese AI lab releases new open-source model rivaling top US offerings, Illinois passes AI regulation package, and more

To help you stay on top of the latest news, our AI practice group has compiled a roundup of the developments we are following.

• Apple has sued OpenAI, alleging that the AI lab stole trade secrets related to Apple’s computer hardware, according to CNBC. The lawsuit, filed in a federal court in California, alleges that several former Apple employees who then worked for OpenAI stole confidential data relating to the development of Apple’s computer hardware, allegedly to boost OpenAI’s own hardware development efforts. OpenAI has been rumored to be entering the hardware space for many months, especially after the company acquired IO Products, a startup founded by former Apple designer Jony Ive last year. Bloomberg reported earlier this week that OpenAI’s planned hardware device will be a mobile smart speaker that can act as an AI companion and assistant. It is unknown if the lawsuit will affect Apple and OpenAI’s existing partnership, which includes ChatGPT integration into Apple’s AI products. For further details and analysis on the Apple-OpenAI lawsuit, MBHB’s Manav Das has a full writeup at this link.

• The Financial Times reports on the release of Moonshot AI’s Kimi K3 model, which claims performance akin to the most advanced U.S. frontier models. K3, with over 2.8 trillion parameters, is the largest Chinese-made AI model to date. According to results released by the company, K3 surpassed both Anthropic’s Opus 4.8 and OpenAI’s GPT 5.5 in several coding and agentic AI benchmarks, though the model was still behind Anthropic’s recently released Fable model in some benchmarks. The release could mark a major shift in the consensus in the AI industry that Chinese models are generally eight to 12 months behind their U.S. counterparts, though several tech figures have sounded the alarm in recent months that China was catching up to the U.S. in terms of AI progress. Chinese-developed models have become increasingly popular around the world as enterprise clients seek to avoid the high subscription or API costs of access to Anthropic or OpenAI models, as Chinese models are often much cheaper to run. Indeed, Moonshot’s K2.6 model, K3’s predecessor, is priced at about a third of the cost of Opus 4.8. Anthropic, for its part, has accused Chinese AI companies of unfairly using its Claude models to train their own through a process known as distillation (as this AI Roundup covered in February). Some observers were quick to hail K3’s release as a major reset of the AI race, with Axios declaring that “China just erased America’s AI lead,” while Bloomberg was more circumspect, writing that the release was “the latest sign that the Asian country’s artificial intelligence labs are closing a technology gap with the U.S.” K3’s full capabilities have yet to be demonstrated publicly, but the model will be available later this month for download as an open-weight model.

• Illinois Gov. J.B. Pritzker has signed a landmark AI regulation package into law, according to a report from Capitol News Illinois. Senate Bill 315, known as the Artificial Intelligence Safety Measures Act, mirrors similar AI frameworks passed in New York and California, generally targeting large developers that generate more than $500 million in annual revenue. To mitigate catastrophic risks like large-scale cyberattacks or the creation of biological weapons, the law introduces new risk-reporting standards, strict 24-to-72-hour incident reporting windows, and a first-in-the-nation requirement for mandatory annual third-party compliance audits. Set to take effect on Jan. 1, 2028, the act earned broad bipartisan support alongside backing from major industry leaders like OpenAI and Anthropic, and carries civil penalties up to $3 million for repeat violations. As Illinois, New York, and California account for roughly 40% of the U.S. AI market, the legislation effectively establishes a de facto national safety standard in the absence of federal regulations. The U.S. Congress has been reluctant to pursue federal AI regulation, and attempts to pass legislation that would preempt state-level AI laws have failed, leaving states with a generally free hand to adopt AI regulation as they see fit. While the AI regulation measures in New York, California, and Illinois were all championed by Democrats, Republican-led states such as Utah and Florida have also introduced their own AI regulations, defying President Donald Trump, who has generally advocated a laissez-faire approach to the topic. AI measures are pending in several other states as well.

• CBS News reports that the University of Chicago Law School is banning the use of phones and laptops in first-year classes as part of an effort to curb AI usage among students. The law school, among the most prestigious in the nation, recently released a strategy statement entitled “Rethinking Legal Education in the AI Era,” which lays out the school’s approach to AI. Most notably, the school will prohibit the use of electronic devices during first-year classes as part of an effort to “ensure that our students actually learn to think critically, strategically, and independently without relying on AI.” However, AI skills will be integrated into the first-year legal writing curriculum. The school aims to have students write without AI before using AI for research and revision, stating that “students will develop their own writing skills independent of generative AI tools while also developing their ability to supervise AI and critique its output.” Reactions among students were mixed — one graduate student interviewed by NBC 5 Chicago said that she was “pretty anti-AI,” while another opposed an AI ban, stating that “it’s better if they teach them how to use it properly instead of forbidding it.” AI use in education has been controversial, with supporters citing the need to prepare students for workplaces where they will almost certainly be using AI tools, while skeptics worry that student learning and critical thinking skills will be harmed if students become too dependent on AI systems. Educational institutions have taken diverging approaches — many universities provide access to AI models to students through Microsoft Office or Google Workspace products, though some institutions have gone even further with AI integration (such as the California State University system, as this AI Roundup has covered). The University of Chicago Law School, however, appears to be the highest-profile institution to adopt an AI-skeptical policy, even in the limited capacity laid out in the strategy statement.

• New York Gov. Kathy Hochul has implemented a one-year moratorium on the construction of new data centers in the state amid a growing backlash against AI infrastructure development, according to the Associated Press. Hochul signed an executive order this past week to implement the moratorium, citing the increased load on electrical infrastructure and possible environmental impacts. At a signing ceremony, Hochul said that “progress shouldn’t arrive with a higher utility bill, deleted water supply or noise pollution, so we have no choice but to address these challenges created by these massive facilities.” Data center construction has become a flashpoint in the ongoing debate over AI in the U.S., and data centers have become broadly unpopular: a June 2026 Reuters poll found that two-thirds of Americans disapprove of the pace of data center construction, and that only 14% of respondents would support a data center being built near them. The most salient point among data center opponents is based around claims that the projects drive up electricity prices for residential customers by spiking demand for electricity: 77% of respondents in the Reuters survey worried that AI will make their electric bills go up. Other concerns commonly raised by data center opponents include water usage, noise pollution, and tax incentives that are often shrouded in secrecy by nondisclosure agreements or other measures. Despite this increased backlash, no statewide moratorium had yet been passed in the U.S. before New York’s move, though at least a dozen states had proposed them. Earlier this year, Maine Gov. Janet Mills vetoed a proposed data center moratorium bill, and other measures have failed to gain traction. However, as opposition continues to grow (and amid growing skepticism from investors that data center investments are worthwhile), it is possible that more states will follow New York’s lead and restrict the development of further data centers in the future.