US warns Chinese AI firms could still face sanctions
What's the story
US Treasury Secretary Scott Bessent has reiterated his warning to Chinese artificial intelligence (AI) companies, saying that sanctions are still a possibility. This comes after a White House official accused Moonshot, a China-based start-up, of illegally distilling Anthropic's Fable model. The process of model distillation involves a smaller model learning from the outputs of a larger one and can sometimes infringe on intellectual property (IP) rights.
IP theft concerns
'Open source is not open season on American IP'
Bessent took to social media platform X to say, "Open source is not open season on American IP."
He added that when Chinese firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table.
Earlier this week, he had said that the US government would look for signs of IP theft in open-source models from China and impose sanctions if found.
Allegations against Moonshot
Moonshot allegedly acquired NVIDIA's GB300-equipped servers
The allegations against Moonshot were made by Michael Kratsios, the White House's science and technology policy chief.
He claimed that the company had conducted large-scale distillation against US models and had acquired NVIDIA's GB300-equipped servers.
These servers are part of NVIDIA's Blackwell generation, which are banned from being sold to Chinese companies.
The claim has raised questions over whether Moonshot violated US export-control rules.
Model skepticism
Release of Moonshot's Kimi K3 raises eyebrows
The release of Moonshot's Kimi K3 last week as an open-weight model has raised eyebrows.
Its advanced capabilities have led some experts to question whether it was primarily developed through distillation from Fable, which has only been publicly available since July 1.
The development has also sparked a wider debate in Washington over the influx of Chinese open models and their potential impact on America's technological edge and national security.
Potential restrictions
US considering rule to host Chinese models with guarantees
The US government is reportedly considering a rule that would allow American companies to host Chinese models only if they guarantee security and accept liability for breaches.
The move comes as some former White House officials have suggested restricting or banning the use of Chinese open-weight models to protect America's technological edge and national security.
However, this has been met with pushback from within the industry.