Chinese firms ‘distilling’ US AI models to create rival products, warns OpenAI | OpenAI

OpenAI has warned that Chinese startups are “constantly” using its technology to develop competing products, amid reports that DeepSeek used the ChatGPT maker’s AI models to create a rival chatbot.

OpenAI and its partner Microsoft – which has invested $13bn in the San Francisco-based AI developer – have been investigating whether proprietary technology had been obtained in an unauthorised manner through a technique known as “distillation”.

The launch of DeepSeek’s latest chatbot sent markets into a spin on Monday after it topped Apple’s free app store, wiping $1trn from the market value of AI-linked US tech stocks. The impact came from its claim that the model underpinning its AI was trained with a fraction of the cost and hardware used by rivals such as OpenAI and Google.

Sam Altman, the chief executive of OpenAI, initially said that he was impressed with DeepSeek and that it was “legitimately invigorating to have a new competitor”.

However, on Wednesday OpenAI said that it had seen some evidence of “distillation” from Chinese companies, referring to a development technique that boosts the performance of smaller models by using larger more advanced ones to achieve similar results on specific tasks. The OpenAI statement did not refer to DeepSeek directly.

“We know [China]-based companies – and others – are constantly trying to distill the models of leading US AI companies,” the OpenAI spokesperson said. “As the leading builder of AI, we engage in countermeasures to protect our IP [intellectual property], including a careful process for which frontier capabilities to include in released models.”

OpenAI, which has itself been accused of using data without permission or a licence from publishers and the creative industry to train its own model, has already blocked unnamed entities from attempting to distill its models.

The OpenAI spokesperson added that it was now “critically important” that the company worked with the US government to “best protect the most capable models from efforts by adversaries and competitors to take US technology”.

On Tuesday, David Sacks, Donald Trump’s AI and crypto tsar, told Fox News that he thought it was “possible” that intellectual property theft had occurred.

“There’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models,” he said. “I think one of the things you’re going to see over the next few months is our leading AI companies taking steps to try and prevent distillation. That would definitely slow down some of these copycat models.”

The US navy has reportedly already banned its members from using DeepSeek’s apps due to “potential security and ethical concerns”.

The White House press secretary, Karoline Leavitt, said the US national security council was looking into the potential implications the AI app posed.

Earlier this week, Trump called the launch of DeepSeek a “wake-up call” for Silicon Valley in the global race to dominate artificial intelligence.

The investigation by OpenAI and Microsoft into possible distillation was first reported by Bloomberg. Microsoft declined to comment.