China-Based Artificial Intelligence Companies Conducting Industrial-Scale Distillation Campaigns Against U.S. AI Companies

The advisory warns that China-based AI companies (e.g., DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, Z.AI) have conducted large-scale, targeted knowledge-distillation campaigns since at least late 2024 to extract proprietary capabilities from U.S. frontier models (Claude, GPT, Gemini, Grok), using gray‑market “transfer stations,” subscription pooling, prompt injections, and automated routing/sanitization; it details attribution, novel TTPs, operational indicators, the economic and strategic impacts, and recommended mitigations including behavioral detection, response alteration, cross-organization intelligence sharing, and technical defenses such as differential privacy and rate limiting.