White House memo claims mass AI theft by Chinese firms

A memo from Michael Kratsios says firms, mainly in China, are wrongfully distilling US AI models.

The White House has said it will work more closely with US artificial intelligence (AI) firms to combat "industrial-scale campaigns" by foreign actors to steal advances in the technology. Michael Kratsios, Director of Science and Technology Policy, wrote in an internal memo that the administration had new information indicating "foreign entities, principally based in China" were exploiting American firms. Through a process called "distilling", such firms are essentially copying AI technology developed by US companies, he said. A representative of China's US embassy in Washington DC said its development was "the result of its own dedication and effort as well as international cooperation". In the memo, Kratsios said the aim was to "systematically undermine American research and development and access proprietary information". In an attempt avoid and halt "malicious exploitation," he said the White House will be doing four things: sharing more information with US AI companies about "tactics employed and actors involved" in distillation campaigns; working to "better coordinate" with companies to fight the attacks; develop a set of "best practices to identify, mitigate, and remediate" them; "explore" how the White House can hold foreign actors accountable for such distillation. The memo did not detail any specific plans for action against foreign entities found to be undertaking distillation of US AI technology. A White House spokesperson declined to comment beyond the memo. A representative of China's US embassy in Washington DC took issue with "the unjustified suppression of Chinese companies by the US" in response to the memo. "China is not only the world's factory but is also becoming the world's innovation lab," the representative added. "China's development is the result of its own dedication and effort as well as international cooperation that delivers mutual benefits."

The White House Office of Science and Technology Policy told federal agencies that the Trump administration will be enhancing its engagement with the private sector to counter foreign-led distillation campaigns designed to undermine U.S. AI advances. The White House Office of Science and Technology Policy on Thursday accused China and other foreign entities of engaging in "deliberate, industrial-scale campaigns to distill U.S. frontier AI systems," and said that the Trump administration will be taking steps to safeguard domestic artificial intelligence products. In a memo sent to federal agencies, the White House office warned that these distillation campaigns—in which a deluge of requests are sent to an AI model in order to train a knockoff version of it—are allowing bad actors to steal proprietary information from U.S. companies. "Models developed from surreptitious, unauthorized distillation campaigns like this do not replicate the full performance of the original," the memo said. "They do, however, enable foreign actors to release products that appear to perform comparably on select benchmarks at a fraction of the cost." Anthropic in February accused three Chinese-based AI companies—DeepSeek, Moonshot AI and MiniMax—of overwhelming its Claude model with 16 million exchanges from roughly 24,000 fraudulent accounts. Those allegations came the same month that OpenAI sent a letter to members of the House China Select Committee that said, in part, that it had seen evidence "indicative of ongoing attempts by DeepSeek to distill frontier models of OpenAI and other US frontier labs, including through new, obfuscated methods." Thursday’s memo does not cite any specific companies engaged in distillation campaigns against U.S. AI firms. But OSTP Director Michael Kratsios said in an X post that "these foreign entities are using tens of thousands of proxies and jailbreaking techniques in coordinated campaigns to systematically extract American breakthroughs." OSTP told agencies that the Trump administration will be taking a series of steps to expand engagement with U.S. companies and crack down on foreign-based distillation campaigns. These include sharing more information with the private sector about attempts to conduct large-scale distillation attacks, enabling companies "to better coordinate against such attacks;" partnering with firms to develop a set of best practices to counter these campaigns; and looking at developing new steps to hold foreign actors accountable for their actions. The memo said these actions are consistent with the White House’s AI Action Plan, which was released in July 2025 and emphasizes the importance of "preventing our adversaries from free-riding on our innovation and investment." The White House’s warning about China-based distillation campaigns is the latest salvo in the U.S. and China’s ongoing competition to lead the global AI race. It also comes as major American AI firms have rolled out what they say are advanced AI models that have exquisite cybersecurity capabilities that could cause national security risks if they fall into the wrong hands.

The White House on Thursday accused China of stealing U.S. artificial intelligence labs' intellectual property on an industrial scale in a memo that threatens to raise tensions ahead of a summit between U.S. and Chinese leaders next month. "The US government has information indicating that foreign entities, principally based in China, are engaged in deliberate, industrial-scale campaigns to distil US frontier AI systems," Michael Kratsios, director of the White House Office of Science and Technology Policy, wrote in a memo shared on social media on Thursday and first reported by the Financial Times. "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," he added.