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A new White House warning is escalating tensions in the global artificial intelligence race, alleging that foreign actors are running large-scale operations to steal advanced US AI technology. The administration says it now has fresh intelligence pointing to what it describes as an organized effort to copy American breakthroughs and weaken US leadership in AI innovation.

The claims are already fueling geopolitical friction, sharpening scrutiny of China’s fast-growing AI sector, and raising questions about how vulnerable top US models may be to systematic extraction and replication.

WHITE HOUSE FLAGS “INDUSTRIAL-SCALE CAMPAIGNS” TARGETING US AI

Michael Kratsios, Director of Science and Technology Policy, wrote in an internal memo that the administration had new information indicating "foreign entities, principally based in China" were exploiting American firms.

He said these operations rely on a process known as “distilling,” where advanced AI systems are effectively copied by studying outputs from US-developed models and using that data to recreate competing systems.

Kratsios warned the goal is "to systematically undermine American research and development and access proprietary information".

CHINA PUSHES BACK AGAINST US ALLEGATIONS

A representative of China’s US embassy in Washington DC rejected the claims, saying its progress in artificial intelligence comes from independent innovation and global collaboration.

The official said "the unjustified suppression of Chinese companies by the US" is unfair and counterproductive.

The embassy added:

"China is not only the world's factory but is also becoming the world's innovation lab,"

and further stated:

"China's development is the result of its own dedication and effort as well as international cooperation that delivers mutual benefits."

INSIDE THE “DISTILLATION” TACTICS RAISE SECURITY CONCERNS

According to the memo, distillation campaigns involve the use of thousands of coordinated accounts that interact with AI chatbots and tools, appearing to be normal users.

These accounts are then used to probe systems, attempt so-called “jailbreaks,” and extract hidden behavioral patterns or model responses. The information is stored and later used to train competing AI systems.

Kratsios described the government’s planned response as an effort to stop what he called malicious exploitation and protect US innovation.

The White House says it will take four major steps: