Scott Bessent stated the administration will investigate whether Chinese companies are stealing intellectual property through AI model distillation.
Scott Bessent, the U.S. Treasury Secretary, announced that the administration will investigate whether Chinese artificial intelligence models are being "distilled" from American models. The government aims to address potential intellectual property theft as Chinese open-weight models begin to compete with leading American offerings from companies like OpenAI and Anthropic. Bessent explained that distillation occurs when a smaller model is built using the outputs of a stronger, existing model. He noted that the administration has already identified watermarks from U.S. large language models on several Chinese models, which he described as unacceptable. To protect American interests, the administration may impose sanctions on overseas companies found to be stealing from U.S. firms. The U.S. and China are scheduled to hold AI talks in September, where Bessent will represent the United States. While Chinese companies are gaining ground, American firms have also faced scrutiny; Anthropic recently settled a $1.5 billion lawsuit over pirated books, and OpenAI faces a copyright infringement suit from the New York Times.