When it comes to Chinese AI labs using distillation techniques to extract knowledge from frontier model makers, Y Combinator CEO Garry Tan is hoping regulators stay out of it. In fact, he thinks U.S. AI labs should perhaps play the same game. “I would do nothing,” he told CNBC in an interview earlier this week. “We could argue that there should be an American distillation regime.” He elaborated to TechCrunch that this means he wants smaller, American open-weight AI labs to use the same kind of training techniques on American frontier AI labs, giving the U.S. a more robust set…