Anthropic isn’t just sparring with Washington over military use of Claude. It’s also accusing Chinese AI labs of siphoning off value from it.

Last month, OpenAI and Anthropic publicly alleged that Chinese AI companies have been improperly extracting capabilities—coding, reasoning and other behaviors—from their proprietary models to train their own competing models, using a technique called “distillation.” In a February 23 press release, Anthropic claimed DeepSeek, MiniMax and Moonshot AI prompted its Claude models 16 million times through roughly 24,000 fraudulent accounts. Earlier this month, OpenAI sent a letter to U.S. lawmakers alleging that DeepSeek similarly improperly trained their models on outputs from OpenAI’s models. Google’s threat intelligence arm, without naming a company, warned in a February report of a rise in distillation attacks targeting Gemini.

The accused companies have not publicly commented on allegations of wrongdoing, and didn’t respond to Forbes’ requests for comment. But the broader point is hard to ignore: Several of these Chinese models are now nearly as good as their American counterparts. Many are open source. Most are cheaper. And that combination is starting to erode confidence in the expensive economics of the entire sector.

“It’s not easy to build these models, and [distillation] is a way to leapfrog that process,” says John Hultquist, chief analyst at Google’s Threat Intelligence Group.

Jenny Xiao, a venture capitalist at Leonis........

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