Anthropic accused Alibaba of attempting to access its flagship AI model, Claude, through an extensive campaign using thousands of proxy accounts. The AI startup raised concerns about national security and restricted product use in China. Alibaba's shares fell 4.8% in Hong Kong following the accusations.

Anthropic alleged that Alibaba and other Chinese tech labs engaged in adversarial distillation, repackaging American AI technology as their own without proper authorization. The company urged the US government to intervene and prevent such practices, citing safety concerns and unfair competition.

The US Senate is considering blacklisting Chinese firms found illegally accessing American AI technology to develop rival products. Similar proposals are being discussed in the House of Representatives, building on actions taken by the Trump administration. The initiatives aim to curb Chinese firms' misuse of American AI models.

Despite warnings from the White House, Anthropic claimed that Alibaba continued its alleged operation post the administration's memo release. The company emphasized the need to address such practices to prevent China from closing the AI gap with the US, potentially posing national security risks.

Amid increasing scrutiny of Alibaba in Washington, the company was recently added to a US Department of Defence blacklist for alleged ties with the Chinese military. Anthropic highlighted these developments in its letter, expressing concerns over the rise of cheaper Chinese competitors and imitation products.

Anthropic's call for stronger government intervention against unfair competition from Chinese companies, including clarifying antitrust rules and imposing penalties on organizations using distillation, may face resistance within the White House. The company is also in a separate dispute with the Trump administration over export controls on its advanced AI models, further complicating the situation.

Despite meetings between Anthropic and White House officials, little progress has been made in resolving the disagreement or restoring access to the company's restricted AI systems. The company's concerns over unauthorized model distillation costs Silicon Valley AI labs billions of dollars annually, as per Bloomberg reports.