Alibaba Stock Falls 2.6% as U.S. Labels AI Distillation a Security Threat

Alibaba (BABA) fell 2.6% to $109.79 on Wednesday after U.S. agencies named it in an AI distillation advisory, citing 151 million illicit Claude queries run against American models. The FBI, NSA, and CISA jointly accused six Chinese AI companies — Alibaba, DeepSeek, Moonshot AI, MiniMax, StepFun, and Z.AI — of running more than 190 million unauthorized exchanges against American AI models, including Claude, ChatGPT, Gemini, and Grok, since at least late 2024. Anthropic's own threat report called Alibaba's campaign, which peaked at three million Claude queries per day across roughly 25,000 fraudulent accounts, 'the largest distillation attack we have ever measured'. China's state newspaper People's Daily hit back, calling the U.S. stance 'naked double standards' — distillation is a routine practice when American companies do it, but labelled an attack when Chinese firms use it — and demanded open, cooperative AI development.