This intelligence for AMers is adapted from a special takeover issue of Jim VandeHei's new weekly newsletter for CEOs:

Cheap, powerful, mostly Chinese open-source AI models are seeping into American companies, often unnoticed.

• Why it matters: Unlike closed models such as Anthropic's Claude or OpenAI's ChatGPT, open-source AI is free to download, cheaper to run, and dominated by China.

Even the richest software company on Earth can't hold the line on closed American-only models:

• Axios' Ina Fried scooped this week that Microsoft is considering using the Chinese AI model DeepSeek as a cheaper option to power Copilot Cowork, the company's agentic assistant and the most compute-hungry part of Microsoft 365.
• So the open-source question is shifting from if to how.

The big picture: The debate over closed vs. open models is also a U.S. vs. China battle. Dominating open-source AI is China's national strategy.

• "Open-source models are dominated by the Chinese — they're like nine months behind the state of the art," a top tech exec tells Mike. "And they're significantly cheaper to run. If you had to buy the frontier models from the top labs, a lot of people would be priced out. We're talking about a 10x, sometimes a 100x, price difference."
• The issue is more urgent than ever, as companies debate heavy reliance on America's dominant and expensive closed models: Claude, ChatGPT and Google's Gemini.

How we got here: "Open source" means the model weights — the actual trained intelligence — are public. Anyone can download, modify and deploy them. The best-performing, most-used ones are Chinese.

• The U.S. incentivized its frontier AI labs to optimize for revenue — with their eyes on trillion-dollar IPOs. That pushed them toward subscriptions and closed ecosystems where every use can be metered.
• The performance of DeepSeek V4 and other leading Chinese models lags U.S. models. But the gap is closing fast.

Behind the scenes: Some companies are already running Chinese models, unbeknownst to their CEOs, because vendors and engineers chose them on price.

• The AI agent platform Lindy switched 100% earlier this month to DeepSeek V4, citing millions in savings and better performance.

The bottom line: Open-source Chinese models are good enough for most work at a fraction of the price. But they come with security risks that many companies aren't grappling with: Beijing has a potential backdoor into many companies, posing a regulatory threat as U.S.-China competition escalates.

• 📈 If you're a CEO or on a CEO's team: Ask to join Jim's new weekly Axios C-Suite newsletter.

Vice President Vance is in Switzerland for a first round of negotiations with Iran, at the Bürgenstock ski resort on Lake Lucerne, Axios' Barak Ravid reports.

• "We already made progress in the last several hours, and I expect we will make additional progress in the hours to come," Vance told reporters today.

Why it matters: The Lake Lucerne Summit marks the first direct talks between the U.S. and Iran since the Islamabad summit last April.

The backdrop: The talks are underway despite Iran claiming yesterday that it was shutting down the Strait of Hormuz in response to Israeli ceasefire violations in Lebanon.

What we're hearing: The U.S. would like the first round of talks to end with an Iranian invitation for UN inspectors to visit its nuclear sites, which were bombed by the U.S. and Israel, two regional sources with direct knowledge said.

• In return, the U.S. is willing to give Iran access to some of its frozen funds — starting with a $6 billion account in Qatar.

Get the latest.

The closer you look at Homeland Security Secretary Markwayne Mullin's declaration that the border wall will be finished by this time next year, the harder it is to make the numbers work, Axios' Brittany Gibson reports.

• Why it matters: DHS has only completed 10% of its planned primary wall. It'll have to navigate construction lawsuits, negotiate with (or sue) private citizens for land access and finalize contracts and designs — all while minimizing the delays that slow big construction projects.

About 698 miles of primary border wall remain to be built, according to a Customs and Border Protection spokesperson.

• The pace would need to increase to more than 13 miles a week to finish on Mullin's self-declared timeline. The primary wall construction rate for most of 2026 has been roughly 2.6 miles per week.

Keep reading.

A record 242 U.S. cities now have typical starter homes valued at $1 million or more, Axios' Sami Sparber writes from a new Zillow report.

• California has the most cities — 105 — with sky-high starter-home prices, followed by New York (41) and New Jersey (26).

Reality check: Seven-figure prices for entry-level homes are still the exception. The typical U.S. starter home is worth less than $200,000, the report finds.

• Explore the data ... Share this story.

Above, you see algae-ridden water being drained from the bottom of the Lincoln Memorial Reflecting Pool yesterday.

• Trump wrote on Truth Social last night: "We met with contractors today, will probably be forced to release and drain much of the water in order to do the necessary repairs, but will have them done as quickly as possible."
• He blamed "terrible Vandals," and said there'll be many more arrests, even though the algae's return was foreseeable.

Catch up quick: Crews have been working to kill the algae bloom that's tinted the pool green since the $14.7 million renovation wrapped with hydrogen peroxide. More recently, the fresh "American flag blue" paint at the bottom of the pool appeared to be peeling away and floating in the water.

• One person arrested by U.S. Park Police was David Hearn, a 67-year-old cyclist and former Olympian. Hearn told The Washington Post he "didn't destroy or break or peel anything" and was arrested after reaching down to touch a piece of already-peeled paint floating in the pool.

More on the arrest (WP gift link).

President Trump and Italian Prime Minister Giorgia Meloni's war of words over a factually contested photo op request at the G-7 exploded yesterday, with the one-time friends blasting each other in angry terms on social media.

• Why it matters: Even as Trump lavishes praise on American adversaries like China's Xi Jinping, close allies are increasingly willing to split with him, Axios' Ben Berkowitz writes.

⚡ Catch up quick: The controversy erupted earlier this week when Trump claimed Meloni begged him for a photo together at the global gathering in France.

• Trump took to Truth Social yesterday to again insist she'd begged for a picture in an effort to improve her poll numbers, and to accuse her of being ungrateful for American support.
• "[S]he wants to be friends again in order to get her 'numbers up.' No thanks!!!" Trump wrote.

Meloni blasted Trump in an Instagram post: "[M]y popularity is none of your concern. I suggest you focus on yours."

🔎 Between the lines: The U.S.-Italy relationship has grown strained in recent months over the war in Iran.

• At one point, Italy denied U.S. aircraft permission to land at its bases. Meloni, in her Instagram post, defended that decision as a matter of protecting Italian sovereignty.

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Millions of World Cup visitors are experiencing American cuisine for the first time, and there's one menu item that's completely foreign: tipping.

• Many restaurants in host cities are adding 20% gratuities to customers' bills this summer to accommodate international fans who might otherwise accidentally stiff their servers, Axios' Josephine Walker reports.

Tipping isn't customary in many countries, but in the U.S., tips are central to workers' pay.

• Anne Calimano, who co-owns Hurley's Saloon in Manhattan, told the New York Post her bar has been jam-packed with the NBA Finals and the World Cup, and her staff has learned to roll with the confusion.
• "They know they're not going to get the 20% or whatever. And they're fine because they're busy and they're making money."

Keep reading.

Singles see AI as a dating tool, not as a dating prospect, according to new Match Group data shared first with Axios' Megan Morrone.

Stat du jour: Match Group surveyed some 1,000 U.S. singles ages 18 to 39.

• 64% of them say they use AI to build a stronger dating profile, keep a conversation flowing on the apps or plan a date.

Read on.