The US is Concerned Over ‘IP Theft’ by Chinese AI Labs

U.S. Treasury Secretary Scott Bessent threatened to impose sanctions on Chinese AI firms deemed to have stolen intellectual property from American technology companies.

“This administration supports open source models, but what we do not support is IP theft,” Bessent said on Fox Business yesterday (Tuesday). “If we see, especially, that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft.”

It comes as Chinese AI models threaten to upend the tech industry in which the United States is the clear leader. Moonshot AI released Kimi K3 this week, which performs well despite not having access to the state-of-the-art computer chips that American firms have.

According to TechCrunch, American companies have been warning the White House for months that foreign firms might copy their AI technology and release it as open source.

Earlier this year, Anthropic accused Moonshot and two other Chinese AI firms, DeepSeek and MiniMax, of “illicitly” extracting Claude’s capabilities. This practice is known as distillation, and it is reportedly common practice in the AI industry. As Gizmodo puts it, it’s when the “teacher” model’s output is used to train the “student” model.

Pot Calling the Kettle Black

Of course, a lot of people in the creative industries will see the irony when they read about AI firms complaining that their IP is being stolen.

Microsoft CEO Satya Nadella called out this hypocritical behavior earlier this month in a tweet aimed at AI companies.

“While the great innovation that comes from model providers having fair use rights to train models on public data is needed, I find it ironic that the status quo is to then turn around and impose restrictive terms on distillation,” Nadella wrote.

Bessent also noted that watermarks of American LLMs have been discovered on Chinese AI models. That is reminiscent of when the Getty Images watermark could be reproduced on pictures generated from Stability AI’s model, Stable Diffusion.

Bessent adds the Trump administration will be looking into the matter in “the coming days or weeks.” Axios reported this week that the government is mulling a total ban on Chinese open source models.

Image creditsHeader photo licensed via Depositphotos.

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