TL;DR
Anthropic accused Alibaba’s Qwen lab of using 25,000 fake accounts for nearly 29 million Claude exchanges, the largest such campaign yet.
Anthropic has accused Alibaba of carrying out the largest distillation campaign yet against a US artificial intelligence company.telling senators and White House officials that operators linked to Alibaba’s Qwen AI lab used nearly 25,000 fraudulent accounts to mine Claude’s capabilities between April and June. The letter, a copy of which was obtained by Bloomberg, described nearly 29 million exchanges with Claude focused on software engineering and agentic reasoning, the model’s most commercially valuable skills.
The indictment marks the first time Anthropic has named a major Chinese technology conglomerate as the source of a distillation attack. Previous allegations in February targeted small Chinese AI companies, including DeepSeek, MiniMax and Moonshot AI, which Anthropic said had collectively generated more than 16 million trades through around 24,000 fake accounts. Alibaba’s campaign alone exceeded the combined volume of the three previous efforts.
Distillation is the practice of feeding carefully constructed queries to a frontier AI model, collecting its responses, and using them to train a cheaper rival system that approximates the capabilities of the original. The White House flagged the technique as a national security issue in April.when OSTP Director Michael Kratsios released a memo committing the government to sharing intelligence with US AI labs on overseas distillation campaigns. Anthropic said in its letter that Alibaba’s campaign took place after the Kratsios memo, defying the administration’s warnings.
The 💜 of EU technology
The latest rumors from the EU tech scene, a story from our wise founder Boris and some questionable AI art. It’s free, every week, in your inbox. Register now!
Alibaba did not comment on the allegations. An Anthropic spokesperson declined to discuss specific details, but emphasized the importance of combating distillation through coordinated action between government and industry.
Alibaba’s American depositary receipts fell more than three percent on the news, falling below $100 in afternoon trading on Wednesday. The stock drop adds to a difficult period for the company in Washington, where it faces pressure on multiple fronts.
The Pentagon added Alibaba to its blacklist of Chinese military companies on June 8Anthropic name cited in your letter. Alibaba sued the Department of Defense this week to obtain removal from that list, calling the label unfounded and arguing that he has no military affiliation. The distillation allegation now opens a second front, framing Alibaba not only as a company with alleged military ties but as an active participant in what Anthropic calls the systematic theft of American AI capabilities.
In its letter, Anthropic warned that adverse distillation allows Chinese labs to replicate cutting-edge AI at a fraction of the cost of training, and that models built this way often lack safety barriers. The company urged the Trump administration to clarify antitrust guidelines so that U.S. labs can share more information about distillation attempts, reiterated its support for export controls on advanced AI chips and called for sanctions against companies that use the technique.
Legislators are moving forward in parallel. Senators Bill Hagerty and Andy Kim plan to introduce an amendment to mandatory defense legislation that would blacklist or sanction any Chinese company that improperly accesses American AI model production. A related bipartisan bill is also being considered in the House, backed by Reps. Bill Huizenga and Sydney Kamlager-Dove, although it is uncertain whether any of the proposals survive into the final version of the defense bill.
The moment is also delicate for Anthropic. The company, now valued at $965 billion after a $65 billion Series H round, confidentially filed for an initial public offering (IPO) this month. and is preparing for an IPO that could appear this fall. U.S. officials have estimated that unauthorized distillation costs Silicon Valley labs billions of dollars, and the threat of cheaper knockoff products from China siphoning off customers is a material risk for a company heading to public markets.
Anthropic’s calls for government support may not find a completely receptive audience, given that the company is embroiled in a separate dispute with the Trump administration over export controls imposed on its Fable 5 and Mythos 5 models less than two weeks ago. Commerce Secretary Howard Lutnick signed an order barring foreigners from accessing those models, citing security concerns, and Anthropic prevented them from complying. Even after meetings between the company’s technical staff and White House officials, little progress has been made toward restoring service.
The result is a company trapped between two fronts. Anthropic needs the government to crack down on Chinese labs mining its technology, but at the same time it is fighting the same government’s decision to restrict its own products. The letter to senators is an attempt to separate the two issues, arguing that protecting American models of distillation and allowing those models to be deployed commercially are complementary, not contradictory, goals.
Whether Washington agrees will determine both the regulatory environment for American AI companies and the competitive dynamics of the industry’s most consequential rivalry. Anthropic has now named four Chinese labs as distillers of its technology, with Alibaba’s allegation being by far the largest in scale. If the legislative proposals gain traction, the consequences could extend far beyond Anthropic’s models and encompass the broader question of how the United States imposes an intellectual property boundary around artificial intelligence systems that exist as software, not hardware, and that can be copied over the Internet with nothing more than a well-crafted notice.
