Global AI shut down – What the United States export controls on AI mean for New Zealand businesses

On the evening of 12 June 2026, the United States Government directed Anthropic to suspend all access to its new Claude Fable 5 and Claude Mythos 5 models to any foreign national, anywhere in the world, including Anthropic's own foreign national employees. Because Anthropic could not reliably sort, by nationality, hundreds of millions of users in real time, it did the only thing it could to comply: it turned both models off, for everyone, everywhere.

Immediately, businesses from around the world, including New Zealand, lost access to a tool that, for some, had become essential to its products and workflows. Although service was eventually returned nearly three weeks later, the effect of the decision was to create further uncertainty for businesses on whether and how to adopt powerful AI models.

The shut down raises some important questions for NZ businesses: what are export controls, what happened with Anthropic and other frontier AI model companies, and what are the implications for businesses using frontier models or products that are covered by US export controls?

What are export controls and how does it impact AI?

Currently there is no overarching US federal legislation specifically governing the development, distribution and use of frontier AI models. Although certain US states, such as California and Colorado, have implemented legislation to impose transparency and security obligations on developers of frontier AI models, the US government has to look at existing tools to restrict the distribution and usage of such models.

Which brings us to export controls. US export controls date back to 1775 when Congress outlawed the export of goods to Great Britain. The current iteration of the law, the Export Control Reform Act 2018, enables the President to control the export, re-export and transfer of items (including commodities, software or technology) to protect national security. This includes controlling the access of controlled technology to a foreign national inside the US and treating that as an export to that person's home country (aka a “deemed export”).

Many countries have similar rules restricting the export of sensitive technologies. In New Zealand, the Government has the ability to restrict the exports of strategic goods under the Strategic Goods List, which is administered by the Ministry of Foreign Affairs and Trade under the Customs Export Prohibition regulations.

What happened with Anthropic?

In Anthropic’s case, the US Secretary of Commerce sent a letter under the US export control powers to immediately suspend access to its Fable and Mythos class of models unless Anthropic obtained an export licence, with the risk of potential civil or criminal sanctions if it did not comply. The order prevented foreign nationals, including Anthropic’s own employees in the US, from accessing the model. The letter followed concerns being raised that Fable could be used to exploit vulnerabilities in publicly available software (although similar vulnerabilities could arguably also be found in other frontier models then being made to the public).

As Fable and Mythos are “closed frontier models”, that is a model which is not downloadable by the user but rather is accessed over the internet from the developer’s servers, it is relatively simple to suspend access. Simply severing the connection to the internet will prevent the public from accessing the model.

This can be compared to “open weight” models. Developers of such models, including China's DeepSeek and Moonshot (and, in the US, Meta with its Llama family), publish on the internet the model “weights”. These are the billions (or now trillions) of numbers that make up the model, which anyone can download, run and adapt on their own hardware. Once weights are public it is essentially impossible to recall them or switch them off.

However, such open weight models are not immune to regulation. The prior Biden administration briefly placed advanced model weights on the US control lists through its January 2025 “AI Diffusion Rule”, but the Trump administration rescinded that rule in May 2025 before it took effect. It has been reported that China is also considering regulating the distribution of such models, such as the recent Kimi model.

Sitting in behind all of this is President Trump’s “Promoting Advanced Artificial Intelligence Innovation and Security” Executive Order dated 2 June 2026. This order requires the development of a classified benchmarking process to assess the advanced cyber capabilities of AI models. It also provides for a voluntary framework for AI developers to engage with the Federal Government to assess the risk of these models. Open AI, in its release of its GPT-5.6 model family of frontier closed models, only made its models generally available after it had shared them with the US Government for review. This, in effect, has created a quasi-licensing scheme for the approval of AI licences.

Global effects

Although export controls feel like a US-centric issue, it has real world downstream effects, including for New Zealand businesses. Not only did the order impact those businesses using the Fable models to build and support software and business processes, but US export controls in general have also impacted New Zealand M&A transactions. In July 2024 Rakon, a manufacturer of advanced technologies for defence (and other) purposes, ended talks on an indicative takeover offer, worth around $391 million, citing “complexities” encountered in due diligence. Those complexities were widely understood to be Rakon's business in China and the associated risk of falling foul of US export controls. Rakon subsequently exited an unnamed Chinese customer said to account for about five per cent of its revenue, a change credited with making the company saleable again.

Takeaways for businesses

In light of the US Government’s increasing focus on the risks of AI models, it is important that all businesses consider the following:

Export controls are operating as a de facto licensing regime for frontier AI models

Until the United States establishes a statutory federal system for approving the release and use of such frontier models, the export control powers provide a strong backstop to fill the vacuum. This is, however, suboptimal. It creates significant uncertainty for developers and users of frontier models where the technology can be switched off with little, to no, warning.

US export controls have global implications, including for New Zealand

New Zealand users lost Fable 5 in June not because of anything in NZ law, but because US law treats access by any foreign national as an “export”. The same controls also impact New Zealand transactions. Rakon's earlier takeover talks allegedly failed amid concerns about US export control exposure. Any New Zealand business whose products, customers or acquirers relate to sensitive technologies must take notice of the risk that US export controls may have on them.

Treat frontier model access as a critical dependency

The Fable 5 shutdown was, in substance, an eighteen-day outage of a critical supplier imposed by a third-party government. Businesses should carefully consider whether it needs to adopt closed frontier or open weight models within its business processes and then map which products and workflows depend on which models. As part of this, businesses need to see whether they can fail over to alternative models, and what legal and commercial impacts and remedies they can rely on if access is suspended. For example, how would government-ordered suspensions be treated, is there any notice obligation or service credits payable, and how should force majeure or a “change in law” clause allocate the risk? Suppliers building on frontier models should address the same risk in their own customer contracts before, not after, the next directive lands.

Hudson Gavin Martin regularly advises businesses, including technology and professional services providers, on the use of AI. Please reach out to your regular Hudson Gavin Martin contact, or the author, if you have any questions or would like to discuss further.