OpenAI has warned US lawmakers that its Chinese rival DeepSeek (深度求索) is using unfair and increasingly sophisticated methods to extract results from leading US artificial intelligence (AI) models to train the next generation of its breakthrough R1 chatbot, a memo reviewed by Bloomberg News showed.
In the memo, sent on Thursday to the US House of Representatives Select Committee on China, OpenAI said that DeepSeek had used so-called distillation techniques as part of “ongoing efforts to free-ride on the capabilities developed by OpenAI and other US frontier labs.”
The company said it had detected “new, obfuscated methods” designed to evade OpenAI’s defenses against misuse of its models’ output.
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OpenAI began privately raising concerns about the practice shortly after the R1 model’s release last year, when it opened a probe with partner Microsoft Corp into whether DeepSeek had obtained its data in an unauthorized manner, Bloomberg previously reported.
In distillation, one AI model relies on the output of another for training purposes to develop similar capabilities.
Distillation, largely tied to China and occasionally Russia, has persisted and become more sophisticated despite attempts to crack down on users who breach OpenAI’s terms of service, the company said in the memo, citing activity it has observed on its platform.
Since DeepSeek and many other Chinese models do not carry a monthly subscription, the prevalence of distillation could pose a business threat to US companies such as OpenAI and Anthropic PBC that have invested billions of dollars in AI infrastructure and charge a fee for their premium services. That imbalance risks eroding the US advantage over China in AI.
OpenAI also highlighted other national security risks raised by DeepSeek’s gains, including that its chatbot had censored results about topics considered controversial by the Chinese government such as Taiwan and the Tiananmen Square Massacre.
When capabilities are copied through distillation, OpenAI said, safeguards often fall to the wayside, enabling more widespread misuse of AI models in high-risk areas such as biology or chemistry.
US Representative John Moolenaar, the Republican chair of the House committee, in a statement on Thursday said “this is part of the CCP’s playbook: steal, copy, and kill,” referring to the Chinese Communist Party. “Chinese companies will continue to distill and exploit American AI models to their advantage, just like when they ripped off OpenAI to build DeepSeek.”
OpenAI’s memo to the House committee suggests that its efforts to block distillation have failed to eliminate the problem. The company said an internal review suggests that accounts associated with DeepSeek employees sought to circumvent existing guardrails by accessing models through third-party routers to mask their source.
DeepSeek employees have also developed code to access US AI models and obtain outputs in “programmatic ways,” OpenAI said.
It also pointed to networks of “unauthorized resellers of OpenAI’s services,” also designed to evade the company’s controls.
White House AI czar David Sacks has previously warned about Chinese distillation tactics, telling Fox News last year that DeepSeek was “squeezing more juice” out of older chips, while also citing “substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models.”
OpenAI’s warning about distillation also comes as many in Washington remain concerned that access to advanced AI chips might also accelerate DeepSeek’s progress. At the end of last year, US President Donald Trump moved to ease chip restraints and allow Nvidia to sell its H200 processors to China, chips that are about 18 months behind the leading Blackwell versions.
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