OpenAI accuses DeepSeek of unfairly extracting results from US AI models to gain an edge

San Francisco – OpenAI claims that its Chinese rival DeepSeek is using unfair and increasingly sophisticated methods to extract results from leading US artificial intelligence (AI) models to train the next generation of its breakthrough R1 chatbot, according to a memo to US lawmakers reviewed by Bloomberg News.

In the memo, sent on Feb 12 to the US House Select Committee on China, OpenAI said that DeepSeek had used so-called distillation techniques as part of “ongoing efforts to free ride on the capabilities developed by OpenAI and other US frontier labs”. The company said it had detected “new, obfuscated methods” designed to evade OpenAI’s defences against misuse of its models’ output.

OpenAI began privately raising concerns about the alleged practice shortly after the R1 model’s release in 2025, when it opened a probe with partner Microsoft into whether DeepSeek had obtained its data in an unauthorised manner, Bloomberg previously reported. In distillation, one AI model relies on the output of another for training purposes to develop similar capabilities.

Distillation, largely tied to China and occasionally Russia, has persisted and become more sophisticated despite attempts to crack down on users who violate OpenAI’s terms of service, the company said in its memo, citing activity it has observed on its platform. 

Since DeepSeek and many other Chinese models do not carry a monthly subscription cost, the prevalence of distillation could pose a business threat to American companies such as OpenAI and Anthropic that have invested billions of dollars in AI infrastructure and charge a fee for their premium services. That imbalance risks eroding the US advantage over China in AI.

When capabilities are copied through distillation, OpenAI said, safeguards often fall to the wayside, enabling more widespread misuse of AI models in high-risk areas like biology or chemistry.

OpenAI declined to comment on the memo. Spokespersons for DeepSeek did not immediately respond to a request for comment outside of regular business hours in Asia.

OpenAI’s memo to the US House China committee suggests that its efforts to block distillation have failed to eliminate the problem. The company said an internal review suggests that accounts associated with DeepSeek employees sought to circumvent existing guardrails by accessing models through third-party routers to mask their source. 

DeepSeek employees have also developed code to access US AI models and obtain outputs in “programmatic ways”, OpenAI said. It also points to networks of “unauthorised resellers of OpenAI’s services”, also designed to evade the company’s controls. 

OpenAI’s warning about distillation comes as many in Washington remain concerned that access to advanced AI chips may also accelerate DeepSeek’s progress. At the end of 2025, US President Donald Trump moved to ease chip restraints and allow Nvidia to sell its H200 processors, chips that are about 18 months behind the leading Blackwell versions.

Since the R1 release, the DeepSeek has put out only minor upgrades, even as competitors in the US and China have launched a flurry of new models. Bloomberg has reported that DeepSeek is developing an agent-based model to compete with OpenAI and other rivals, and had hoped to release it in late 2025. 

Shortly after the R1 release, the US authorities opened a probe into whether DeepSeek circumvented US export controls by purchasing chips via Singapore.

Records recently obtained by the US House China committee show that Nvidia provided technical support to help DeepSeek improve and co-design its R1 model. The DeepSeek-V3 base model required only 2.8 million H800 graphics processing unit hours for its full training. Those processors were allowed to be sold to China for a few months in 2023, until rule later that year halted sales. BLOOMBERG