US government agencies have accused six Chinese artificial intelligence companies of engaging in industrial-scale model distillation to copy capabilities from leading Western systems including Claude, GPT, Gemini, and Grok.
The operations reportedly began at least by the end of 2024 and targeted the companies DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI. According to the accusations, the firms extracted billions of tokens through millions of automated requests to proprietary APIs in order to accelerate training of their own models.
Model distillation is a recognized machine-learning technique in which a smaller model learns from outputs produced by a more advanced system. The US authorities emphasize that the issue lies in the unauthorized, automated, and covert use of commercial services to reproduce restricted features at massive scale.
Operations relied on a combination of direct APIs, cloud providers, aggregators, and proxy services to mask query origins. Shared accounts and high-volume premium subscriptions helped reduce costs while avoiding rate-limiting and detection mechanisms.
Among the capabilities sought were chain-of-thought reasoning, programming assistance, software engineering tasks, autonomous agent functions, and multimodal processing. Several campaigns deployed automated systems that switched routing paths whenever access was blocked.
US officials state that the scale and technical sophistication of the activity indicate distillation has become a central element of these companies’ AI development pipelines and assess that the operations were likely conducted with knowledge of the Chinese government.
China has rejected the accusations, asserting that its advances in artificial intelligence result from independent innovation. Beijing described the claims as baseless and called for greater international cooperation in AI development.
