GoKawiilSilicon Valley giants and national security experts "are calling for action against Chinese companies engaged in model distillation," reports CNBC. But "I would do nothing," says Y Combinator CEO Garry Tan. "We could argue that there should be an American distillation regime."
Distillation is the process of using the outputs of a more capable AI model to train a smaller or less capable one, sometimes illicitly... Anthropic has accused Chinese companies such as Moonshot AI, DeepSeek, and MiniMax of the practice, while OpenAI believes DeepSeek's V3 and R1 model architectures were distilled from its own GPT-4 and GPT-4o models. In the midst of this, the U.S.'s National Security Agency, Cybersecurity and Infrastructure Security Agency, and Federal Bureau of Investigation released an official cyber security advisory warning on the topic on Tuesday...
But Tan believes regulators should focus less on curbing distillation and more on creating an equilibrium between open weight models and frontier models — as long as frontier models retain a price premium that allows their business model to remain feasible. "This is actually the ideal case. You want open weight models to give people freedom and access," he explained. "If I were a regulator, that's what I would go after." Tan acknowledged that this is a hard balance to strike, calling it "a tightrope." Nevertheless, he says it's a balance worth pursuing — saying it "could result in the best possible outcome."
Tan later told TechCrunch he'd like to see America with more open-weight options that aren't Chinese, built by smaller U.S. open-weight AI labs using those same training techniques on products from America's frontier AI labs:
Anthropic CEO Dario Amodei had previously publicly called on U.S. regulators to crack down on distillation. It's notable that the commander of Silicon Valley's prestigious and prolific startup accelerator doesn't agree.
To be clear, Tan isn't advocating for American AI labs to use stolen credentials to distill. He wants them to be free to come in the front door. In fact, his argument is twofold. He feels it's an overreach for AI labs to dictate what their customers can do with the information their models share with them. He also notes that the proprietary AI labs didn't ask permission when they vacuumed up as much human knowledge as they could to train their models. They famously ingested plenty of copyrighted material without the permission of those intellectual property holders. "Controlling what users and customers do with API calls to closed weight models feels constraining, and there's a role government can play here to normalize the fact that access to intelligence that was trained on broad public access data should itself also be more a form of a public good than something locked away behind restrictive terms of service," he told TechCrunch when asked why American labs should be free to distill, too...
To him, the true AI doomer scenario is for all the immense power of frontier AI to wind up in the hands of a single powerful, proprietary provider. "The nightmare scenario, the doomer scenario for AI is that there's just one company," he said. "It has the best access to capital. It has the best AI researchers. It runs away with it and suddenly there's one company that's monolithic. And that would be bad."
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