Jensen Huang says AI distillation is 'competition.'

Nvidia CEO Jensen Huang pushed back against U.S. officials who have labeled AI model distillation - training new models on the outputs of existing ones - as theft, arguing instead that studying competitors’ systems is simply competition. He said companies are free to test and dissect others’ products to learn how they work, acknowledged that Nvidia’s own offerings have been stripped down by rivals trying to copy capabilities, and suggested technical controls such as disabling services or restricting access if firms want to prevent that learning. Huang framed the practice as an engine that raises overall quality rather than as illicit appropriation.

U.S. authorities, by contrast, have treated distillation as a national-security and intellectual-property concern in the U.S.-China AI rivalry. Treasury official Scott Bessent previously called the practice theft and warned of potential sanctions; the Cybersecurity and Infrastructure Security Agency accused Chinese firms of running “industrial-scale” distillation campaigns that violate terms of use. Startup Anthropic publicly accused Alibaba and DeepSeek of illicit distillation, while China denied the allegations. The dispute has become a policy flashpoint as Washington considers measures targeting overseas companies that leverage distillation to extract capabilities from U.S.-built models.