US accuses China’s Moonshot AI of stealing technology from American rival

The United States has accused Chinese artificial intelligence company Moonshot AI of illegally using technology from a leading American AI developer, escalating tensions between the world’s two largest technology powers. The allegations were made by White House Science and Technology adviser Michael Kratsios, who claimed the Chinese company copied the capabilities of a US model to develop its own advanced AI system.

Kratsios said Moonshot AI used a technique known as distillation to build its recently unveiled Kimi K3 model. Distillation is a process in which a smaller or less advanced AI model repeatedly interacts with a more powerful model to learn from its responses and improve its own performance. While the technique has legitimate uses within companies that own both models, using it to copy another company’s proprietary system without permission could violate intellectual property rights.

According to Kratsios, the US government has information indicating that Moonshot AI extracted capabilities from Anthropic’s AI technology during the development of Kimi K3. He also alleged that the company gained access to restricted Nvidia servers powered by the advanced GB300 Grace Blackwell computing platform, despite US export controls designed to limit China’s access to cutting edge semiconductor technology.

Moonshot AI has not publicly responded to the accusations. The Chinese embassy in Washington, Anthropic, Nvidia, and the White House had also not issued detailed comments following the allegations.

The claims come just days after Moonshot AI introduced Kimi K3, an advanced open source language model that attracted global attention for its strong performance. Many industry experts said the model significantly narrowed the gap between Chinese and American AI technology. Moonshot described Kimi K3 as being capable of competing with some of the most advanced AI systems developed in the United States.

The allegations have intensified concerns within Washington over the protection of American technology. US Treasury Secretary Scott Bessent recently said authorities are investigating whether Chinese AI companies have copied the capabilities of American competitors through large scale distillation efforts. He warned that sanctions remain an option if Chinese firms are found to have engaged in intellectual property theft.

Bessent said the United States supports open source artificial intelligence because it encourages innovation and wider access to technology. However, he stressed that open source development does not give companies permission to copy protected American research or commercial products.

The dispute comes at a sensitive time in US China relations. President Donald Trump is expected to meet Chinese President Xi Jinping in September as both countries continue negotiations on trade, technology, and security issues. Artificial intelligence has become one of the most important areas of competition between the two nations.

The United States first imposed restrictions on exports of Nvidia’s most advanced AI chips to China in 2022 over concerns that the technology could strengthen China’s military capabilities. Since then, governments have increased efforts to prevent the illegal transfer and smuggling of high performance semiconductor chips into China.

Moonshot AI plans to release Kimi K3 as an open source model on July 27, allowing developers around the world to download, modify, and build applications using the software. The planned release has generated significant interest because it would become one of the largest freely available AI models developed by a Chinese company.

The latest accusations are not the first involving Anthropic. Earlier this year, the American AI company accused Chinese technology giant Alibaba of using similar distillation methods to copy the capabilities of its Claude AI models. Anthropic urged US lawmakers to strengthen legal protections for American AI technology and introduce tougher penalties for companies found to be stealing intellectual property.

The White House has also announced broader measures to protect American innovation from foreign cyber and technology theft. Officials say the government is working more closely with leading AI companies to detect and prevent organised efforts aimed at copying proprietary research. As investigations continue, the allegations against Moonshot AI are expected to become another major issue in the growing technological rivalry between the United States and China.