A top White House official publicly accused China-based Moonshot AI of conducting large-scale distillation of Anthropic’s Fable model to build its breakthrough Kimi K3 system, escalating the confrontation over Chinese open-weight AI.
Michael Kratsios, director of the White House Office of Science and Technology Policy, posted on X that the administration has information Moonshot developed a sophisticated internal platform to conduct large-scale distillation against US models, allowing the company to switch between access methods to avoid detection. Treasury Secretary Scott Bessent doubled down, saying sanctions remain on the table.
The open-weight Kimi K3 landed last week and immediately matched top-tier US models on coding and reasoning benchmarks, rattling investors who had assumed American labs held an unassailable lead. Critics of the distillation claim note that K3’s capabilities would be difficult to replicate purely from Fable’s outputs, since that model only entered public hands on July 1.
Anthropic’s head of public policy thanked Kratsios for speaking out, calling illicit distillation IP theft and industrial espionage that creates serious national security risks. The episode marks a rare alignment between the Trump administration and Anthropic, which had previously been at odds over export controls and military use of Claude.
