White House Claims Covert Model Distillation
A U.S. official said Moonshot AI, a Chinese firm, is distilling Anthropic’s Fable AI model to build Kimi K3. The White House Office of Science and Technology Policy director, Michael Kratsios, accused the company of using this technique at a large scale to steal U.S. intellectual property. He emphasized that while distillation—used to make models smaller and more efficient—is legitimate, the covert use to undermine American innovation is not.
Kimi K3, launched on July 16, is now one of China’s most advanced AI models. U.S. officials have raised concerns that American models are being used to fast-track China’s AI development. But the timeline between Anthropic’s Fable 5 model becoming available and Kimi K3’s release only gives 15 days for any distillation to occur. Some researchers argue that’s not enough for the type of transfer claimed.
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Treasury Secretary Scott Bessent warned that firms engaging in large-scale distillation attacks would face sanctions and Entity List designations. He stressed that while open-source AI supports innovation, it doesn’t justify stealing U.S. intellectual property. This follows the re-release of Fable 5 after U.S. export controls were lifted. Dean Ball, OpenAI’s head of strategic futures, said he doesn’t believe Kimi K3’s performance could be explained by distillation or similar techniques.