[Today’s Signal] After GPUs, APIs — U.S.-China AI Rivalry Spreads to the Data Frontier
Allegations that Chinese AI companies engaged in industrial-scale distillation of advanced U.S. AI models have entered a new phase. The first concrete regulatory move has come not from additional U.S. sanctions, but from China. Chinese internet regulators are reportedly investigating DeepSeek and Mo
Chinese internet regulators are probing AI firms DeepSeek and Moonshot AI for potentially routing user data to Anthropic's Claude AI model. This marks a new development in the AI rivalry between the U.S. and China. In the U.S., the focus has been on whether Chinese companies extracted reasoning capabilities from advanced U.S. models.
However, in China, the concern is whether sensitive data from Chinese companies, public institutions, and users was sent to the U.S. AI model. A September 10 threat intelligence report by Anthropic revealed that Chinese companies used proxy services and vast networks of accounts to collect Claude outputs. It attributed over 151 million exchanges to Alibaba-related distillation activity between May and July, more than 23 million involving Moonshot AI, and more than 12.1 million involving DeepSeek over 14 days in July.
DeepSeek and Moonshot AI allegedly forwarded user requests to Claude while users believed they were interacting with Kimi, a domestic AI service. The information routed through Claude included internal code, credentials, and data from a major Chinese state-owned enterprise and a surveillance system linked to the People's Liberation Army.
The Chinese Cyberspace Administration of China (CAC) reportedly questioned the implicated companies, but has not yet concluded whether they violated the law or imposed penalties. Model distillation, the technique used here, is common in AI development but the Chinese regulator's response centers on suspicious account usage, proxy services, and data transfers.
This case signifies the shifting focus of AI controls from physical infrastructure like GPUs and semiconductors to model access and data flows.
Written by urgent.news from Korea IT Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
