Elon Musk’s X on Monday denied allegations made by French authorities as part of a criminal investigation into alleged data tampering, adding that it would not submit to the prosecutor’s demand to hand over data.

X’s global government affairs account said the French investigation, which ramped up this month, is “politically-motivated” and designed to “restrict free speech.”

“French authorities have launched a politically-motivated criminal investigation into X over the alleged manipulation of its algorithm and alleged “fraudulent data extraction,” X said in a post on the social media platform. “X categorically denies these allegations.”

French prosecutors started an investigation in January over allegations that the company’s algorithm was being used for the purposes of foreign interference. The probe began after two complaints — one from a French member of parliament and another from a senior official at a public institution.

This month, the investigation was handed over to a key unit of France’s national police. Prosecutors said the investigation would focus on investigating offences of tampering with automated data systems as well as the fraudulent extraction of data from these systems.

“French authorities have requested access to X’s recommendation algorithm and real-time data about all user posts on the platform in order for several ‘experts’ to analyze the data and purportedly ‘uncover the truth’ about the operation of the X platform,” X said.

Musk’s social media platform also said it, “remains in the dark as to the specific allegations made” against it.

“However, based on what we know so far, X believes that this investigation is distorting French law in order to serve a political agenda and, ultimately, restrict free speech,” X said.

“For these reasons, X has not acceded to the French authorities’ demands, as we have a legal right to do. This is not a decision that X takes lightly. However, in this case, the facts speak for themselves.”

CNBC has reached out to the Paris prosecutor’s office for comment.

X took fire at two specific individuals. The company claimed the two “experts” who will review X’s algorithm are David Chavalarias, director of the Paris Complex Systems Institute (ISC-PIF) and Maziyar Panahi, an AI platform leader at ISC-PIF.

X noted Chavalarias runs a campaign called “Escape X” which encourages users to leave the social media platform, and said Panahi “has previously participated in research projects with David Chavalarias that demonstrate open hostility towards X.” Both researchers have indeed been named on a research paper related to X.

“The involvement of these individuals raises serious concerns about the impartiality, fairness, and political motivations of the investigation, to put it charitably. A predetermined outcome is not a fair one,” X said.

CNBC has reached out to both Chavalarias and Panahi, and has yet to receive a comment on X’s statement.

China’s exports of rare-earth magnets to the United States in June surged more than seven times from the prior month, as American firms clamor to get hold of the critical elements following a preliminary Sino-U.S. trade deal.

In April, Beijing placed restrictions on several critical magnets, used in advanced tech such as electric vehicles, wind turbines and MRI machines, requiring firms to receive licenses for export. The move was seen as retaliation against U.S. President Donald Trump’s steep tariffs on China. 

Beijing has a stranglehold on the production of rare-earth magnets, with an estimated 90% of the market, as well as a similar hold on the refining of rare-earth elements, which are used to make magnets. 

The U.S. received about 353 metric tons of rare-earth permanent magnets in June, up 660% from the previous month, data released by China’s General Administration of Customs showed, though the exports were about half that from June last year.

The U.S. was the second-largest destination for China’s rare-earth magnets, behind Germany, as it relies heavily on their imports for its large manufacturing sector, particularly automotive, electronics and renewable energy. 

In total, China exported 3,188 metric tons of rare earth permanent magnets globally last month, up nearly 160% from May, but 38% lower compared with the same period last year.

The growth in exports came after Washington and Beijing agreed last month on a trade framework that included easing controls on Chinese rare-earth exports as well as a rollback of some American tech restrictions for shipments to China. 

AI behemoth Nvidia said last week it was planning to resume shipments of its H20 AI chips to China, after the exports were restricted in April. Last month, controls on American AI chip software companies’ business in China had also been rolled back.

Chinese rare-earth magnet producers started announcing the approval of export licenses last month.

If exports continue to increase, it will be of great benefit to companies that have been suffering from shortages of magnets due to the lengthy time required to secure export licenses. For example, several European auto-parts suppliers were forced to halt production in recent months. 

The magnet shortages had also hit emerging industries such as humanoid robotics. In April, Elon Musk said production of Tesla’s Optimus humanoid robots had been disrupted. 

China’s controls on its rare-earths sector have prompted some global governments to reexamine their rare-earth supply chains and search for ways to support domestic mining of the minerals. 

However, experts say that setting up alternatives to China’s rare-earth magnet supply chain could take years, as it requires an intricate process of rare-earth element refining and separation. 

“The separation process is quite complex, and China has a lot of advantages in this after putting in decades of research into the processes,” Yue Wang, a senior consultant of rare earths at Wood Mackenzie, told CNBC last month. 

One way that the U.S. has been trying to compensate for lack of rare-earth magnets is through increased recycling. Apple and miner MP Materials announced a $500 million deal last week for the development of a recycling facility that will reinforce the iPhone maker’s U.S. magnet supply chain.

Peter Alexander from financial consultancy Z-ben Advisors said that Washington’s latest concessions on tech restrictions were a reflection of just how much leverage China has in its trade relationship with the United States, speaking on CNBC’s “China Connection” on Monday.

Despite being beaten down by years of U.S. trade restrictions, China’s telecom giant Huawei has quietly emerged as one of the country’s fiercest competitors across the entire AI landscape.  

Not only does the Shenzhen-based firm appear to represent Beijing’s answer to American AI chip darling Nvidia, but it has also been an early adopter of monetizing artificial intelligence models in industrial applications. 

“Huawei has been forced to shift and expand its core business focus over the past decade… due to a variety of external pressures on the company,” said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group.

This expansion has seen the company get involved in everything from smart cars and operating systems to the technologies needed for the AI boom, such as advanced semiconductors, data centers, chips and large language models. 

“No other technology company has been able to be competent in so many different sectors with high levels of complexity and barriers to entry,” Triolo said. 

This year, Nvidia CEO Jensen Huang has become increasingly vocal in calling Huawei “one of the most formidable technology companies in the world.” He has also warned that Huawei will replace Nvidia in China if Washington continues to restrict U.S. chip firms’ exports to the Asian country.

Nvidia surpassed $4 trillion in market capitalization last week to become the world’s most valuable company. Its cutting-edge processors and a related “CUDA” computing system remain the industry standard for training generative AI models and applications. 

But that moat may be narrowing, as Huawei proves that it not only does it all, it does it well. While challenging American AI stalwarts like Nvidia is a tall order, the company’s history shows why it can’t be counted out.

Huawei, which now employs more than 208,000 people across over 170 markets, came from humble beginnings. Founded by ambitious entrepreneur Ren Zhengfei in 1987 out of an apartment in Shenzhen, the firm started as a small telephone switch distributor.

As it grew into a telecoms player, it gained traction by targeting less developed markets such as Africa, the Middle East, Russia and South America, before eventually expanding to places like Europe.

By 2019, Huawei would be well-positioned to capitalize on the global 5G rollout, becoming a leader in the market. Around this time, it had also blossomed into one of the world’s largest smartphone manufacturers and was even designing smartphone chips through its chip design subsidiary, HiSilicon. 

But Huawei’s success also attracted increasing scrutiny from governments outside China, particularly the U.S., which has frequently accused Huawei’s technology of posing a national security threat. The Chinese company has refuted such risks. 

Huawei’s business suffered a major setback in 2019 when it was placed on a U.S. trade blacklist, preventing American companies from doing business with it. 

As the impact of the sanctions kicked in, Huawei’s consumer business – once the company’s largest by revenue – halved to about $34 billion in 2021 from the year before.

The company still managed a breakthrough on AI chips, and pressed ahead despite additional U.S. restrictions in 2020 that cut the company off from chipmaker Taiwan Semiconductor Manufacturing Co. A year earlier, Huawei officially launched its Ascend 910 AI processing chip as part of a strategy to build a “full-stack, all-scenario AI portfolio” and to become a provider of AI computing power.

But the U.S. targeting of Huawei also had the effect of turning the company into a martyr-like figure in China, building upon attention it received in 2018 when Meng Wanzhou, Huawei’s CFO and daughter of Ren, was arrested in Canada for alleged violations of Iran sanctions.

As the U.S.-China tech war continued to expand and broad advanced chip restrictions were placed on China, Huawei was an obvious choice to become a national champion in the race, with more impetus and state backing for its AI plans. 

“The export controls have ironically pushed Huawei into the arms of the Chinese government in a way that CEO Ren Zhengfei always resisted,” Triolo said. In this way, the restrictions also became “the steroids” for Huawei’s AI hardware and software stack.

After another year of declining sales in the consumer segment, the unit started to turn around in 2023 with the release of a smartphone that analysts said contained an advanced chip made in China. 

The 5G chip came as a shock to many in the U.S., who didn’t expect Huawei to reach that level of advancement so quickly without TSMC. Instead, Huawei was reportedly working with Chinese chipmaker SMIC, a company that has also been blacklisted by the U.S.

While semiconductor analysts said the scale that Huawei and SMIC could produce these chips was severely limited, Huawei nonetheless had proved it was back in the advanced chip game. 

It was also around this time that reports began surfacing about Huawei’s new AI processor chip, the Ascend 910B, with the company looking to seize upon gaps left by export controls on Nvidia’s most advanced chips. Mass production of the next-generation 910C is reportedly already on the way. 

To fill the void left by Nvidia, Huawei “has been making big strides in replicating the performance of high-end GPUs using combinations of lower chips,” said Jeffrey Towson, managing partner at TechMoat Consulting.

In April, Huawei unveiled its “AI CloudMatrix 384”, a system that links 384 Ascend 910C chips in a cluster within data centers. Analysts have said CloudMatrix is able to outperform Nvidia’s system, the GB200 NVL72, on some metrics.

Huawei isn’t just catching up, “it’s redefining how AI infrastructure works,” Forrester analysts said in a report last month about CloudMatrix.

Meanwhile, Huawei has also developed its own “CANN” software system that acts as an alternative to Nvidia’s CUDA. 

“Winning the AI race isn’t just about faster chips. It also includes delivering the tools developers need to build and deploy large-scale models,” Forrester’s report said, though authors noted that Huawei’s products are still not integrated enough with other commonly used tools for developers to switch over quickly from Nvidia.

The company has been deploying its Ascend AI chips and AI CloudMatrix 384 at its growing portfolio of AI data centers, which are operated by its cloud computing unit, Huawei Cloud, established in 2017 to compete with the likes of Amazon Web Services and Oracle. 

These data centers, in turn, have provided the training capabilities and computing power used by Huawei’s suite of AI models under its Pangu series. 

Unlike other general-purpose AI models like OpenAI’s GPT-4 or Google’s Gemini Ultra 1.0, Huawei’s Pangu model is designed to support more industry-specific applications across the medical, finance, government, industrial and automotive sectors. Pangu has already been applied in more than 20 industries over the last year, the company said last month. 

Rolling out such AI applications often involves having Huawei tech staff working for months at the project site, even if it’s in a remote coal mine, Jack Chen, vice president of the marketing department for Huawei’s oil, gas and mining business unit, which provides digital and intelligent solutions to transform these industries, told CNBC.

That research enabled the company in May to deploy more 100 electric-powered trucks that can autonomously transport dirt or coal using the telecom company’s 5G network, AI and cloud computing services.

And it’s not limited to China. The technology can “be replicated on a large scale in Central Asia, Latin America, Africa, and the Asia-Pacific,” Chen said.

Huawei has also open-sourced the Pangu models, in a move it said would help it expand overseas and further its “Ascend ecosystem strategy,” which refers to its AI products built around its Ascend chips.

Speaking to CNBC’s “Squawk Box Asia” on Thursday, Patrick Moorhead of Moor Insights & Strategy said he expected Huawei to push Ascend in countries part of China’s Belt and Road Initiative — an investment and development project aimed at emerging markets. 

Over a period of five to 10 years, the company could begin to build serious market share in these countries, in the same way it once did with its telecommunications business, he added.