Chinese AI Companies Conducting Distillation Campaigns Against U.S. AI Companies [pdf]

Can someone walk me through exactly how powerful distillation is?

I've never seen a good blog post or metric establishing what % of a new model's "intelligence" can be captured. I'm not disputing the document's claim. Widespread effort at distillation is clear evidence that it is highly effective. I guess I just don't have an intuitive or technical sense for how powerful distillation is.

I wouldn't want to over state it, but from the point of view of a nation state excluded from a class of technology, acquiring it by means which look unusual and probably are is not inherently "wrong" -it probably breaks at least one other nations laws and attracts sanctions but you won't get any party from the USSR or the PRC or any other trade sanctioned economy past and present to agree "they did a wrong thing" because firstly states are essentially amoral and do things in the interest of the state good or bad, right or wrong, they are judged as fruitful or unfruitful and secondly although it's classic "whataboutism" in many ways, "you made me do it" is very strong.

"You only leapfrogged us by stealing our tech and copying it" is a very weak line of reasoning. "You did not contribute to the embedded R&D costs to get to this point" is dickering about the price attributed to all three of George Bernard Shaw, Oscar Wilde and Winston Churchill.

Kinda cool and very meta if Chinese AI companies are using distillation to liberate model value from US investment driven AI companies, by then releasing models created with distillation for free. Its circular IP and copyright avoidance and potential model improvement all the way down.

Parallels to how China bootstrapped their state manufacturing capacity with Western company joint ventures contributing capital and know how, and then gave them the boot once they no longer needed them.

Saw this firsthand when Deepseek's thinking model referenced Claude and Open AI guidelines in separate chats as part of the thinking process notes.

O no! China is plundering the very plunder we worked very hard to plunder from everyone on earth.

Time to run the same playbook back to their frontier labs.