US officials warn that Chinese firms conducting covert, industrial-scale AI distillation could face sanctions and export restrictions.
A White House official accused Moonshot AI of distilling Anthropic’s Fable AI model to develop Kimi K3, which launched last week.
In a post on X on Wednesday, White House Office of Science and Technology Policy Director Michael Kratsios alleged the Chinese AI firm developed an internal platform to distill US models at scale, using methods designed to evade detection.
“Legitimate AI distillation used to create smaller, more efficient models plays a vital role in this open innovation ecosystem,” he said. “However, large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable.”
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