Anthropic just dropped one of the most explosive allegations in the ongoing US-China AI rivalry. In a letter sent to US Senators Tim Scott and Elizabeth Warren on June 10, 2026, the company claims that Alibaba’s Qwen AI lab ran what it describes as the largest known “distillation” campaign against its Claude model.
The numbers are staggering. Anthropic alleges that operators connected to Alibaba created roughly 25,000 fraudulent accounts and generated over 28.8 million exchanges with Claude between April 22 and June 5, 2026. That’s six weeks of systematic extraction targeting the model’s most advanced capabilities.
What distillation actually means, and why it matters
Instead of building capabilities from scratch, a smaller or cheaper model queries a more powerful one millions of times, studying its responses to learn how it “thinks.” The student model then replicates those capabilities without the billions of dollars in training costs.
In this case, Anthropic says the operation specifically targeted software engineering and agentic reasoning functionalities associated with its Mythos Preview model. Alibaba has firmly denied any wrongdoing, calling the accusations baseless.
A pattern, not an isolated event
This isn’t the first time Anthropic has raised alarms about Chinese AI labs copying its work. Back in February 2026, the company disclosed similar distillation campaigns by other Chinese AI labs, reportedly including DeepSeek and Moonshot.
On platforms like OpenRouter, Chinese models have accounted for between 30% and 58% of token usage among US developers in recent periods.
The regulatory angle
Anthropic’s decision to take its complaints directly to the Senate is a calculated move. By framing model distillation as a national security and intellectual property issue, the company is positioning itself to benefit from whatever regulatory response follows. Stricter export controls on AI model access are already being discussed in Washington.
What investors should be watching
The token usage data tells its own story. If Chinese models are capturing 30% to 58% of developer token consumption on major platforms, the revenue implications for US AI companies are substantial. Lower revenue means less capital for research, which means the distillation problem becomes self-reinforcing. Cheaper copies reduce the original’s market share, which reduces funding for the next generation of capabilities, which makes the copies even more competitive by comparison.