In Depth: AI Distillation in China Leaves U.S. Tech Giants at Odds

The U.S. government has leveled sweeping new accusations against China’s leading AI developers, claiming that they are conducting systematic extraction of proprietary functionalities and capabilities of American-developed models through industrial-scale knowledge distillation campaigns. 

A Tuesday joint report from the National Security Agency (NSA), Federal Bureau of Investigation (FBI) and Cybersecurity and Infrastructure Security Agency (CISA) alleged that the Chinese government is “likely” aware of the distillation activities, through which DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun and Z.AI “extracted billions of tokens across millions of exchanges/requests” from U.S. top AI models, including variants of Claude, GPT, Gemini and Grok, since at least late 2024.