A coalition of more than 340 artificial intelligence startup founders, academic researchers and open-source model maintainers broke publicly with the dominant industry lobbying campaign on Sunday, releasing a detailed letter that supports the broad framework of the Sanders-Ocasio-Cortez moratorium bill but warns that the legislation as currently drafted would crush small AI labs while leaving the largest companies relatively unscathed.

The letter, organized through a coalition calling itself the Open Compute Coalition and released a day before the Senate is expected to hold a cloture vote on the Responsible Artificial Intelligence Compute Pause Act, marks the most visible fracture inside the AI sector since the bill was introduced on March 26. It complicates the narrative pushed for the past two weeks by the major cloud and chip companies, who have argued that any moratorium would inflict uniform harm on American innovation.

“We support a pause on the construction of new gigawatt-class training facilities. We do not support a pause that ends the careers of the next generation of American AI researchers,” the letter said. “The current draft achieves the second result without achieving the first.”

Signatories included the founders of nine venture-backed AI startups that have raised between $40 million and $400 million in the past two years, faculty members from the AI laboratories at Stanford, the Massachusetts Institute of Technology, Carnegie Mellon, the University of Washington and Berkeley, and the lead maintainers of three widely used open-source foundation-model projects. Several prominent former employees of OpenAI, Anthropic and Google DeepMind, who now run their own research outfits, also signed.

The coalition’s central complaint is technical but consequential. The bill’s pause on training runs above a defined compute ceiling, set at 10 to the 26th power floating-point operations, would in principle exempt nearly all academic and startup work, which typically runs orders of magnitude below that threshold. But the bill also imposes a separate moratorium on data-center construction above 50 megawatts and a freeze on new grid interconnection approvals above 200 megawatts. Smaller labs, the signatories argued, rent capacity from the same hyperscaler facilities that would be subject to those construction limits, and would therefore find their access to graphics processing units constrained even when their own workloads sit far below the regulated tier.

“If you stop a 600-megawatt campus from getting built in Ohio, you do not just stop the model the hyperscaler intended to train there,” said Iris Vandermeer, chief executive of Lattice AI, a Boston-based startup that develops protein-design models and was among the signatories. “You stop the 200 small customers who would have rented a slice of that campus to do drug discovery, climate modeling and academic research. That is the part of the bill that needs to be fixed before it becomes law.”

The letter proposes three amendments. First, it asks Congress to add a federally guaranteed reserved-capacity allocation for academic, nonprofit and small-business customers at any data center subject to the moratorium’s grandfather clause. Second, it requests a more permissive open-source carve-out, raising the parameter threshold below which model weights can be released without federal licensing from the current draft’s level. Third, it urges the establishment of a public-compute facility, modeled loosely on national laboratory infrastructure, that would provide subsidized access to graphics processing units for researchers outside the major firms.

Senate offices reached on Sunday described the letter as a significant development that did not, on its own, change the math of the vote. “It is a useful piece of evidence for the senators we still need to land,” said one Democratic staffer working on the bill, who was not authorized to speak publicly. “It shows that the opposition is not unanimous inside the AI world. It also tells us where the markup needs to go this week if cloture survives.”

A Sanders spokesperson, Maya Friedrichs, said the senator’s office had been in contact with several of the letter’s organizers in recent days and was “open to refining the academic and small-business provisions” but would not weaken the construction moratorium itself. Ocasio-Cortez’s office issued a statement Sunday afternoon welcoming the letter and pledging to incorporate the public-compute proposal into the House version of the bill.

The hyperscaler trade group leading the opposition, the American AI Coalition, responded by reiterating its own position that any moratorium, however carved, would push frontier work abroad. “We share the signatories’ concern about startup access to compute, which is exactly why we have proposed a $40 billion private investment package in nuclear and geothermal generation to relieve grid pressure without a federal freeze,” said Karim Doshi, who leads the coalition’s policy operation. “A pause is a pause, no matter who you exempt.”

The split has been weeks in the making. Several startup founders interviewed on Sunday described private frustration with the hyperscaler lobbying campaign, which they said had spoken for the AI industry without seeking input from smaller players. Two founders said they had been asked by their cloud providers to sign onto industry letters opposing the bill in late March and had declined.

“We pay our cloud bill every month and we are grateful for the capacity, but the largest companies do not represent our interests in Washington and we are not going to pretend they do,” said Devon Lakhanpal, founder of an Oakland-based AI tools startup who signed the letter. “When the public sees a billion-dollar lobbying push, they think that is the AI industry. We wanted to say that there is another part of this industry that thinks the grid concerns are legitimate.”

Academic signatories framed their concerns in slightly different terms. Hannah Roy, a computer science professor at the University of Washington who works on machine-learning systems for climate modeling, said the moratorium debate had exposed how dependent university research had become on commercial cloud capacity. “Twenty years ago, you would run a serious computational experiment on a supercomputer your university owned and operated,” Roy said in a phone interview. “Today, my graduate students run their experiments on the same physical hardware that the hyperscaler uses for its consumer chatbot. If that hardware sits behind a regulated facility, my students sit behind it too.”

Wall Street reaction to the letter on the futures markets late Sunday evening was muted, with chip-sector indexes trading roughly flat in overnight sessions. A note from Wedbush analyst Priya Venkatesh, circulated to clients Sunday night, said the document “modestly increases the probability that the Senate markup produces a more nuanced bill” and described the proposal for a public-compute facility as “a credible compromise vehicle that did not previously exist in the conversation.”

Senate aides said the cloture motion was still expected late Sunday or early Monday and that the additional carve-out language flagged by the Open Compute Coalition would be considered, if at all, during markup later in the week. Aides on both sides cautioned that the underlying vote count had not yet shifted, and that final whip counts were not expected to be locked in until hours before the floor action.