“However, large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable.”

What’s actually happening behind the scenes is that certain inference providers will classify a prompt and it’s re-routed transparently to Anthropic and that’s used for distillation training, only distilling the complicated traces they need, originating from real user prompts and traces. These inference providers are explicitly blocked in the claude cli if you reverse engineer it.

The real picture is that these Chinese labs have figured out how to get exactly what they need, at a high quality, directly from distinct and unique real user prompts.

It’s only “covert” because Anthropic doesn’t like it, while simultaneously being perfectly fine to do.