American artificial intelligence (AI) giant Anthropic has accused its Chinese AI rivals DeepSeek and Moonshot on Thursday of covertly routing customer requests to its Claude models, then showing users the responses as if they were from their own models.
The new allegations mark a further escalation in US criticism of China’s AI industry practices. Earlier this week, three US government agencies, including the National Security Agency (NSA) and the Federal Bureau of Investigation (FBI), claimed that six Chinese companies were engaged in an industrial campaign to steal US model outputs, “likely with Chinese government awareness”.
Beijing on Wednesday rejected those allegations, describing them as actions by Washington to suppress China’s AI industry and threatening retaliatory measures.
While US companies OpenAI and Anthropic have repeatedly accused their Chinese counterparts of “stealing” their outputs to improve their own models in a process known as “distillation”, Anthropic’s latest claims mark the first time it has accused Chinese companies of re-routing users directly to Claude, which would expose Chinese users’ information and activity to the American company.
“[These] findings raise concerns about the misuse of user data by PRC AI labs,” the company said in its 154-page report released on Thursday.
According to the report, Kimi model developer Moonshot secretly showed its users Claude model outputs and passed them off as Kimi’s, then used those exchanges to improve their own models.
In one 10-day window, Moonshot allegedly routed 300,000 requests to Claude through 5,380 fraudulent accounts, most of which appeared to be located in Singapore and Japan.
The Beijing-based company has emerged as one of China’s leading AI champions following the success of its K3 model release in July, with its models surging in popularity globally.
The company’s annual recurring revenue (ARR) – a key metric that projects current monthly subscription income over a 12-month period – is expected to reach US$1 billion by the end of the year, doubling since mid-2026, according to Nomura Securities.
However, Anthropic said that the diverted traffic allowed it to see sensitive data belonging to Moonshot’s customers in the US, Europe and China, including a user “likely” affiliated with China’s People’s Liberation Army who thought they were using Kimi to analyse CCTV footage of a targeted person in Chengdu, Sichuan province.
It claimed to have also accessed data from “high-profile” Chinese tech companies, without specifying which ones.
DeepSeek is also accused of diverting user requests to Claude, although Anthropic did not say how large the Hangzhou company’s operation was.
Moonshot and DeepSeek did not immediately respond to requests for comment.
The report accuses five other Chinese companies of distilling their Claude models since February 2026, including Qwen developer Alibaba Group Holding, GLM developer Z.ai, MiMo developer Xiaomi and M model developer MiniMax.
Alibaba owns the South China Morning Post. None of the companies responded to requests for comment during China’s non-working hours.
Distillation is a widely used technique in the AI industry that uses the outputs of larger AI models to train smaller ones.
However, Anthropic said in its latest report that Chinese firms are engaged in a form of “illicit” distillation because of the “industrial” scale of their efforts to access the outputs of Anthropic’s models, which the company does not permit to be used in China, through fake accounts and stolen credit cards.
Joe Khawam, managing director of legal and AI policy at the Law Reform Institute in Washington, said that the Anthropic report highlights new data privacy concerns surrounding Chinese companies’ distillation practices, which could violate both US and Chinese laws.
“I would think that Chinese law could potentially be implicated as well here,” he said. “There are details here that are potentially legally relevant.”
Khawam, a former US Department of State lawyer, also noted the timing of the two reports as a potential signal that the Trump administration will raise the issue of Chinese companies’ distillation practices at the coming US-China AI talks this month.
“It’s clear that the US government is digging much deeper into this issue and beginning to develop what the [distillation] campaigns entail,” he said.
“I think all of that is putting the US government in a position to diplomatically engage with the Chinese government on this issue and see if they could achieve their objectives quietly without having to resort to other tools.” -- SOUTH CHINA MORNING POST
