Anthropic accuses Alibaba of running the largest distillation campaign yet against Claude

Anthropic has accused Alibaba of waging the largest distillation campaign yet against a US AI company, telling senators and White House officials that operators linked to Alibaba’s Qwen AI lab used nearly 25,000 fraudulent accounts to extract Claude’s capabilities between April and June. The letter, a copy of which was seen by Bloomberg, described nearly 29 million exchanges with Claude targeting software engineering and agentic reasoning, the model’s most commercially valuable skills.

The accusation marks the first time Anthropic has named a major Chinese technology conglomerate as the source of a distillation attack. Previous allegations in February targeted smaller Chinese AI startups, including DeepSeek, MiniMax, and Moonshot AI, which Anthropic said had collectively generated more than 16 million exchanges through about 24,000 fake accounts. The Alibaba campaign alone exceeded the combined volume of all three earlier efforts.

Distillation is the practice of feeding carefully constructed queries to a frontier AI model, collecting its responses, and using those responses to train a cheaper rival system that approximates the original’s capabilities. The White House flagged the technique as a national security concern in April, when OSTP Director Michael Kratsios published a memo committing the government to share intelligence with US AI labs about foreign distillation campaigns. Anthropic said in its letter that the Alibaba campaign took place after the Kratsios memo, in defiance of the administration’s warnings.

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Alibaba had no comment on the allegations. An Anthropic spokesperson declined to discuss specifics but emphasised 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, dropping below $100 in afternoon trading on Wednesday. The stock decline adds to a difficult period for the company in Washington, where it faces pressure on multiple fronts.

The Pentagon added Alibaba to its Chinese military companies blacklist on 8 June, a designation Anthropic cited in its letter. Alibaba sued the Defense Department this week to win removal from that list, calling the label baseless and arguing it has no military affiliation. The distillation accusation now opens a second front, framing Alibaba not just 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 adversarial distillation lets Chinese labs replicate frontier AI at a fraction of the training cost, and that models built this way often lack safety guardrails. The company urged the Trump administration to clarify antitrust guidelines so US labs can share more information about distillation attempts, reiterated its support for export controls on advanced AI chips, and called for penalties against firms that use the technique.

Lawmakers are moving in parallel. Senators Bill Hagerty and Andy Kim plan to introduce an amendment to must-pass defence legislation that would blacklist or sanction any Chinese firm found to be improperly accessing US AI model output. A related bipartisan bill in the House, backed by Representatives Bill Huizenga and Sydney Kamlager-Dove, is also being considered, though whether either proposal survives to the final version of the defence bill is uncertain.

The timing is sensitive for Anthropic as well. The company, now valued at $965bn after a $65bn Series H round, filed confidentially for an IPO this month and is preparing for a listing that could come as soon as this autumn. US officials have estimated that unauthorised distillation costs Silicon Valley labs billions of dollars, and the threat of cheaper imitation products from China that siphon away customers is a material risk for a company heading to public markets.

Anthropic’s calls for government support may not find a fully 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 blocking foreign nationals from accessing those models, citing security concerns, and Anthropic disabled them to comply. Even after meetings between the company’s technical staff and White House officials, little progress has been made to restore service.

The result is a company caught between two fronts of its own. Anthropic needs the government to crack down on Chinese labs extracting its technology, but it is simultaneously 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 US models from distillation and allowing those models to be deployed commercially are complementary rather than contradictory goals.

Whether Washington agrees will shape both the regulatory environment for US 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 the Alibaba accusation by far the largest in scale. If the legislative proposals gain traction, the consequences could extend well beyond Anthropic’s models to the broader question of how the US enforces an intellectual property border around AI systems that exist as software, not hardware, and that can be copied over the internet through nothing more than a well-crafted prompt.