White House accuses Chinese company of distilling Anthropic’s Fable

Summary

The White House has accused Chinese AI company Moonshot AI of distilling Anthropic's Fable model to develop its own K3 model. A top US technology official stated that Moonshot AI used a sophisticated platform to conduct large-scale distillation against US models and acquired GB300 servers, potentially through Thailand, for training. This accusation highlights concerns over intellectual property theft and national security implications in the AI development race.

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A top White House technology official is accusing a Chinese company of distilling Anthropic’s models to create their own AI product. Michael Kratsios, who leads the White House Office of Science and Technology Policy, claimed that Moonshot AI, a Beijing, China-based AI company, had distilled Anthropic’s recently-released Fable model to develop its own K3 model. “To do this they developed a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of access to avoid detection,” Kratsios wrote on X Wednesday. Kratsios also said the company has used GB300 servers – either newly acquired or through Thailand – to train its AI models. “The United States strongly supports the free and fair development of AI, including a thriving competitive ecosystem that spans frontier models, specialized systems, open-source frameworks, and open-weight models,” Kratsios continued. “Legitimate AI distillation used to create smaller, more efficient models plays a vital role in this open innovation ecosystem. However, large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable.” Kratsios did not provide details on how the U.S. government learned that K3 had been distilled from Anthropic’s model. Frontier AI companies in the U.S. have pressed policymakers to make it more difficult for third-parties to copy or duplicate advanced commercial models, calling it a form of intellectual property theft. On their website, Moonshot AI describes its Kimi K3 model as the first open 2.8 trillion parameter model, and promotes its lower token costs while still delivering near-frontier performance. “While its overall performance still trails the most powerful proprietary models, Claude Fable 5 and GPT 5.6 Sol, Kimi K3 demonstrated frontier-level performance across our evaluation suite, consistently outperforming other tested models,” the company said on its website. A request for comment sent to Moonshot AI was not returned before this article’s publication. Piyush Sharma, CEO of Tuskira, an AI cybersecurity detection and response company, said distillation of AI models allows developers many of a model’s core capabilities. He pointed to another example when Anthropic earlier this year accused Chinese company Alibaba of distilling their Claude AI model. According to Anthropic, the campaign used 25,000 fraudulent accounts to run 28.8 million interactions on Claude over six weeks. Given that kind of volume “the goal was clearly replication,” he said. “When a model has learned to reason through software weaknesses, security gaps, and attack paths, copying its behavior also copies that analytical capability,” said Sharma. In April, Rep. Andrew Garbarino, R-N.Y., who chairs the House Homeland Security Committee and Rep. John Moolenaar, R-Mich., Chair of the Select Committee on China, announced they were conducting a joint investigation into the integration of Chinese AI models. The committees said the inquiry will also focus on “examining a pattern of conduct by [Chinese]-based AI laboratories involving the large-scale theft of proprietary capabilities from American frontier AI systems through adversarial distillation” as well as “ the redistribution of those stolen capabilities as open-weight models available for global download, and the incorporation of PRC-origin models into products used daily by hundreds of thousands of American developers and engineers.” Western governments and industry accuse Chinese companies of routinely stealing their technology, intellectual property and other trade secrets, often with the tacit support of Beijing. The copying of AI models would continue a long and established tradition of Chinese-sponsored intellectual property theft. However, while distillation attacks by foreign governments or companies on U.S. frontier companies can have real national security implications, it’s still a fraught question of where policymakers should draw the line. The AI industry, which includes not just frontier companies but large businesses with their own bespoke models, smaller proprietary startups and a vibrant open-source ecosystem, routinely share and use third-party data, including critical code and training sets for AI models. Further, U.S. frontier AI companies have built and trained their world leading models in large part by crawling the open internet, ingesting content created and produced by others. Critics (and multiple ongoing lawsuits) argue that AI companies like OpenAI and Anthropic built their empires on data and content from others, taken almost entirely without consent or compensation. Share Facebook LinkedIn Twitter Copy Link

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