US Flags Industrial-Scale AI Model Distillation by Chinese Firms

In the memorandum, it said that foreign actors, primarily based in China, are engaged in "industrial-scale campaigns" to distil US frontier AI systems by using proxy accounts and jailbreaking techniques to access proprietary information.

"However, the United States government has information indicating that foreign entities, principally based in China, are engaged in deliberate, industrial-scale campaigns to distill U.S. frontier AI systems. Leveraging tens of thousands of proxy accounts to evade detection and using jailbreaking techniques to expose proprietary information, these coordinated campaigns systematically extract capabilities from American AI models, exploiting American expertise and innovation," the statement read.

The document noted that while such methods may not fully replicate the performance of original models, they allow foreign entities to develop lower-cost alternatives that can appear competitive on select benchmarks. It also warned that these models may lack key safety features and safeguards present in US-developed systems.

Highlighting the risks, the memorandum stated that such activities undermine American innovation and could weaken safeguards designed to ensure AI systems remain neutral and reliable. It added that while legitimate AI distillation is a recognised practice for developing smaller models, unauthorised large-scale extraction of capabilities is unacceptable.

To address the issue, the Trump Administration said it will share intelligence with US AI companies, strengthen coordination with the private sector, develop best practices to detect and prevent such activities, and explore measures to hold those responsible accountable.

"To address this threat, the Trump Administration will: Share information with U.S. AI companies concerning attempts by foreign actors to conduct unauthorised, industrial-scale distillation, including the tactics employed and actors involved. Enable the private sector to better coordinate against such attacks. Work together with private industry to develop best practices to identify, mitigate, and remediate industrial-scale distillation activities and build strong defences against such activities. Explore a range of measures to hold foreign actors accountable for industrial-scale distillation campaigns," the statement read.

- ANI