Anthropic has accused Chinese technology giant Alibaba of carrying out what it describes as the largest known attempt to illicitly extract its artificial intelligence capabilities, escalating tensions in the increasingly fierce global battle over advanced AI models and intellectual property.
In a letter sent to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, the AI company alleged that operators linked to Alibaba and its AI research division conducted a large-scale “distillation attack” aimed at replicating Anthropic’s technology through millions of interactions with its models.
The allegations follow Alibaba’s recent lawsuit against the U.S. Department of Defense over its designation as a company linked to China’s military, and add another layer to growing concerns in Washington that Chinese firms are seeking to accelerate AI development by leveraging American breakthroughs.
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The June 10 letter, addressed to Senate Banking Committee Chairman Sen. Tim Scott and ranking member Sen. Elizabeth Warren, accused Alibaba of attempting to extract proprietary capabilities from Anthropic’s frontier AI systems through what the company described as a coordinated and fraudulent operation.
According to Anthropic, operators affiliated with Alibaba and its AI laboratory conducted approximately 28.8 million exchanges with Anthropic models between April 22 and June 5 using roughly 25,000 fraudulent accounts.
The company characterized the activity as “brazen” and “illicit,” describing it as the largest distillation effort it has identified to date.
Distillation is a widely used AI development technique in which a smaller model is trained using outputs generated by a larger and more advanced model. While distillation itself is a legitimate machine-learning practice, AI developers increasingly distinguish between authorized distillation conducted with permission and unauthorized efforts designed to replicate proprietary capabilities.
Anthropic argues that the alleged activity crossed that line.
Why Distillation Has Become a Major Battleground
The dispute highlights one of the most significant challenges facing leading AI companies. Training frontier AI models requires enormous investments in computing infrastructure, talent, and data. Companies such as Anthropic, OpenAI, and Google spend billions of dollars developing advanced systems.
Once released, however, those models can potentially be queried repeatedly to generate training data for competing systems.
Industry executives increasingly fear that unauthorized distillation could allow competitors to reproduce key model capabilities at a fraction of the original cost. The issue has become particularly sensitive as Chinese and American firms race to dominate artificial intelligence development.
Several AI companies have privately warned policymakers that model extraction and distillation could become one of the most important intellectual property battles of the AI era, potentially rivaling disputes over semiconductors and advanced manufacturing technologies.
Anthropic used the letter not only to detail its allegations but also to urge policymakers to take a more active role in protecting U.S. AI leadership.
“We believe combating the threat of illicit distillation requires coordinated action between government and industry, and we will continue working with Congress and the Administration to maintain American AI leadership,” an Anthropic spokesperson said.
The appeal reflects growing pressure from leading AI firms for stronger legal protections and clearer enforcement mechanisms against model theft and unauthorized replication. Unlike traditional intellectual property disputes, AI model extraction can be difficult to detect and prove, particularly when interactions occur through publicly accessible interfaces and cloud services.
Alibaba Faces Mounting Scrutiny
Alibaba has not publicly responded to the allegations. A representative for the company did not immediately provide comment following publication of the report.
The accusations arrive at a difficult moment for the Chinese technology giant. Just days earlier, Alibaba filed a lawsuit against the U.S. government seeking removal from a Pentagon list of companies allegedly connected to China’s military. The company has argued that the designation has no factual basis and unfairly damages its reputation and business relationships.
Now, the Anthropic allegations risk reinforcing concerns among U.S. lawmakers about Chinese access to advanced American AI technologies.
Washington has already imposed restrictions on advanced semiconductor exports to China and tightened controls on access to high-performance computing technologies needed to train frontier AI systems. As those restrictions expand, concerns are increasingly shifting from hardware access to model access.
U.S. officials fear that Chinese firms could narrow the AI gap through model extraction techniques rather than through direct access to advanced chips. For AI companies, the concern is that if frontier models can be replicated through large-scale distillation efforts, the economics underpinning billions of dollars in AI investment could be undermined.