US Accuses Chinese AI Firms of Copying American Technology via Distillation

The US government on Tuesday accused Chinese artificial intelligence companies of maliciously copying technology from American AI firms, potentially complicating relations ahead of a planned meeting between leaders of the world’s two biggest economies later this month.

The Chinese companies copied US AI labs’ intellectual property through a technique known as distillation, according to a statement from US law enforcement and intelligence officials.

Distillation is the process of training smaller AI models using output from larger, more expensive ones as part of an effort to lower the costs of training a new AI tool.

US officials accused six Chinese companies, including DeepSeek, Moonshot AI and Alibaba, of tapping variants of American-made AI models to train their AI products more quickly. Alibaba is the owner of the South China Morning Post.

The companies did so “likely with Chinese government awareness”, according to the statement from US officials, who added that the Chinese companies targeted AI models from Anthropic, OpenAI, Alphabet’s Google and SpaceX.

“China-based AI companies are engaging in aggressive, malicious and targeted distillation activities at an industrial scale,” the officials said.