xAI and Anthropic’s Cat-and-Mouse Game: Data Distillation and Cloud Leasing

According to Beating Monitor, Musk’s xAI has been exposed for engaging in a prolonged cat-and-mouse game with Anthropic. In an effort to outpace competitors, xAI launched a months-long distillation project, directly training its code model on Claude’s output. Even after Anthropic blocked official access channels, covert data extraction continued. In January, xAI co-founder Tony Wu informed employees that official access had been cut off. Subsequently, xAI engineers switched to accessing Claude via personal accounts, prompting Anthropic to ban the associated accounts. After the accounts were blocked, xAI turned to third-party encrypted intermediary platform Blackbox AI to indirectly invoke the interface—a practice that persisted until mid-May 2026 for benchmarking purposes. In May, Musk acknowledged in court during his lawsuit against OpenAI that Grok’s training partially relied on competitors’ models, calling cross-model training an industry norm. This cat-and-mouse struggle escalated in May into a dramatic compute leasing deal: facing a computational capacity bottleneck, Anthropic decided to lease data center computing power from xAI at a rate of $1.25 billion per month. Although Musk repeatedly claimed the compute leasing was only a short-term arrangement, the massive influx of funds alleviated financial pressure on xAI’s losses. While the compute contract could not fully offset xAI’s massive first-quarter deficit, it provided a crucial AI growth narrative for SpaceX’s upcoming IPO push on Wall Street.