Michael Kratsios accuses China's Moonshot AI of stealing American technology through large-scale distillation attacks.
Michael Kratsios, the White House Science and Technology adviser, accused China's Moonshot AI of conducting a "large scale" effort to steal the capabilities of top U.S. artificial intelligence models. Kratsios stated that Moonshot AI used a process known as distillation—where a weaker model extracts answers from a stronger one—to develop its K3 model from Anthropic's Fable AI. The administration announced that it will examine whether Chinese AI models have stolen capabilities from American rivals. Treasury Secretary Scott Bessent stated that sanctions are on the table for Chinese companies that "cross the line" into intellectual property theft. To address these concerns, a bipartisan group of lawmakers introduced the Collaboration on Adversarial Threats and Security Risks Act. This legislation seeks to create an antitrust exemption, allowing U.S. companies like OpenAI and Anthropic to coordinate on security risks without violating standard competition rules. While China maintains that its AI development is the result of its own dedication, the U.S. government is moving to protect domestic innovation from foreign competition.