China’s internet regulator is investigating DeepSeek and Moonshot AI following allegations from Anthropic that the two companies routed millions of user interactions to its Claude AI models without authorisation. The probe, reported by The Information on September 22, focuses on possible data leaks involving Chinese users and sensitive information sent abroad.
According to people familiar with the matter, the Cyberspace Administration of China launched the inquiry after Anthropic’s September threat report accused seven Chinese firms of engaging in illicit AI distillation. DeepSeek was said to have routed more than 12.1 million exchanges to Claude during a 14-day period in July, while Moonshot allegedly channelled nearly 300,000 customer requests through 5,380 fraudulent accounts over ten days. Both companies reportedly used Claude responses to improve their own AI models.
Anthropic described the activity as illicit distilltion, which involves using another model’s outputs to enhance performance. The company claimed some of the routed prompts contained corporate, surveillance, police and other sensitive information. Moonshot allegedly displayed Claude responses to customers while presenting them as its own Kimi outputs, while DeepSeek reportedly relayed requests involving Chinese police systems and national identification numbers.
Neither DeepSeek nor Moonshot have publicly responded to the reported investigation. Chinese authorites have also not confirmed the specific allegations or disclosed potential enforcement actions. The dispute adds to growing US-China tensions over artificial intelligence and intellectual property. US agencies recently warned American AI companies about large-scale efforts targeting proprietary model capabilties. Treasury Secretary Scott Bessent said sanctions could follow if evidence verified Chinese model distillation, stating, “We’re going to be looking at that in the coming days or weeks.”
The investigation comes as DeepSeek prepares to brief the UN Security Council on AI risks this week. Reuters reported the meeting will address artificial intelligence and international security concerns. Any confirmed violations could influence privacy controls, model access ruls, and safeguards around sensitive prompts. For now, the probe remains unclosed and awaits findings from Chinese authorities.
