Instead of an outright ban on open-source AI, the US administration is signaling a different strategy: cracking down on IP theft. Treasury Secretary Besant stated that if overseas models are found to be stealing from US companies, the government has the ability to sanction the companies behind them, effectively creating a barrier without banning the technology itself.

Dario Amadei's call to stop selling advanced chips to China is a strategic play to control the pace of AGI development. He argues that since a global pause is impossible, restricting China's hardware access turns a geopolitical race into a more manageable competition between Western labs like Anthropic and DeepMind.

Anthropic's decision to withhold its powerful Mythos AI is not just about safety. It's a savvy business tactic to handle a GPU compute crunch, prevent Chinese labs from copying its IP, and reinforce its brand as the most safety-oriented AI company, all while creating scarcity and demand.

The push for stricter US government action against China's AI practices is not just from politicians. Leading AI companies like OpenAI and Anthropic are pressuring Washington to curb Chinese 'distillation' of their models, framing it as a threat to national security and America's lead in AI.

AI lab Anthropic is softening its 'safety-first' stance, ending its practice of halting development on potentially dangerous models. The company states this pivot is necessary to stay competitive with rivals and is a response to the slow pace of federal AI regulation, signaling that market pressures can override foundational principles.

Anthropic's choice to label data collection by Chinese labs as a 'distillation attack' is a strategic branding move. This framing aligns with their public image focused on AI safety and geopolitical concerns, rather than just being a technical description of the activity.

A new battle line in AI is emerging around model distillation. US officials are framing "covert industrial distillation," like Moonshot AI's alleged activities, as unacceptable IP theft. This is distinct from legitimate distillation used to create smaller, efficient open-source models, setting the stage for future regulation and trade disputes.

Proposals to ban American developers from using Chinese open-source models would backfire badly. It would cut the US off from global innovation, as the rest of the world would continue to build upon these models. The correct approach to stop Chinese distillation is for US AI labs to block access at the source.

With an $18 trillion market-cap coalition backing open source AI, a government ban is unlikely. The battleground will likely shift from policy to the courtroom, with firms like Anthropic potentially suing foreign companies for IP theft via model distillation.