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The method at issue is model distillation: routing a competitor's API at volume, collecting the outputs, and feeding them into your own supervised training pipeline.
Each Claude response carries signal about reasoning structure and instruction-following behavior that would otherwise require substantial independent data collection and labeling to replicate.
Anthropic says China-based AI labs, including Alibaba and Moonshot AI, did exactly that, unauthorized, at a scale of millions of exchanges.
The mechanism behind the allegation Distillation from a frontier model works because API access is structurally open.
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