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⚠️Are US AI models being distilled by Chinese Competitors?

Plus: ChatGPT Users by Country: India leads the Chart.

Yaro Celis

Feb 16

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ChatGPT is growing faster overseas, led by students’ usage. Also, Chinese models are becoming a concern over their advanced video outputs, allowing anyone to create movie-like scenes, but face scrutiny over using “distillation,” a technique that replicates advanced model capabilities more efficiently. We explain what distillation is, why it matters, and share key tools and resources to learn it.

Are US AI models being distilled by Chinese Competitors?
SeeDance2.0 generates very realistic videos, and Disney is nervous.
🧰 AI Tools - Distillation Tools
ChatGPT Users by Country: India leads the Chart.
📚Learning Corner - Distillation Tutorials

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📰 AI News and Trends

The creator of the viral AI assistant OpenClaw has joined OpenAI to help drive the next generation of personal agents.
Anthropic got an 11% user boost from its OpenAI-bashing Super Bowl ad
Meta plans to add facial recognition to its smart glasses
Disney sends a cease and desist letter to ByteDance over Seedance 2.0, but ByteDance has promised to set strong guardrails around its latest model to avoid copyright issues.
Google puts users at risk by downplaying health disclaimers under AI Overviews
Pentagon threatens to cut off Anthropic in AI safeguards dispute
NASA allowed AI to control its Perseverance rover on Mars for two days
NPR’s David Greene says he was “completely freaked out” when he heard an AI voice from Google’s NotbebookLM that sounded just like his own, and he’s suing over it.

Other Tech News

Young consumers spend more on luxury items in the TikTok era
China said it would scrap tariffs for 53 African nations, as Beijing looks to maintain its position as the continent’s largest trading partner amid competition from Washington

ByteDance, TikTok’s parent company, has launched Seedance 2.0, an AI video generator that turns simple text prompts into cinematic videos with storylines, characters, voiceovers, and sound, positioning it as a direct rival to OpenAI’s Sora and Google’s Veo.

The model, integrated into CapCut (with ~642 million monthly active users), can create realistic 15-second clips and is driving rapid adoption alongside ByteDance’s broader AI ecosystem, including its Doubao chatbot with nearly 250 million monthly users. However, the tool has sparked major backlash from Hollywood, with Disney issuing cease-and-desist letters and the Motion Picture Association accusing ByteDance of using copyrighted content “on a massive scale.” Privacy concerns also emerged after filmmakers reported AI-generated voices mimicking real people without consent. To scale its AI ambitions, ByteDance is investing heavily in infrastructure, including plans to deploy over 7,000 Nvidia Blackwell chips in overseas data centers, signaling its intent to compete globally and potentially reshape video production, advertising, and entertainment.

📚Learning Corner

DeepSpeed Distillation Documentation

Distilling large models at scale
Production deployment
GPU optimization

Best for enterprise and large-model distillation

Are US AI models being distilled by Chinese Competitors?

OpenAI has warned US lawmakers that Chinese AI company DeepSeek used “distillation” techniques to extract outputs from OpenAI’s models and train its competing R1 chatbot, calling it an attempt to “free-ride” on billions of dollars of US AI investment. Distillation allows a smaller or cheaper model to replicate the capabilities of advanced systems by learning from their responses, giving DeepSeek a major cost advantage. Its V3 model reportedly required just 2.8 million GPU hours using older Nvidia H800 chips. OpenAI also detected obfuscated access methods, including third-party routing and unauthorized resellers, designed to bypass safeguards.

Lawmakers and national security officials view this as both a business threat, undermining paid AI services from OpenAI and Anthropic, and a strategic risk, as copied models may lack safety protections and could be used in sensitive areas like biology or cyberwarfare. The situation highlights a growing AI arms race between the US and China, where technical replication, infrastructure access, and chip supply chains, not just original invention, are becoming decisive competitive factors.

🧰 AI Tools of The Day

Distillation Tools

PyTorch Knowledge Distillation - PyTorch provides built-in support for distillation by allowing a smaller “student” model to learn from the output probability distributions of a larger “teacher” model. This improves efficiency while maintaining accuracy, enabling deployment on lower-power hardware like phones, drones, or edge devices.
Hugging Face Transformers - Hugging Face offers tools to distill large language models like BERT, GPT, and Llama into smaller versions. It includes pretrained distilled models such as DistilBERT and allows developers to train student models using teacher outputs, dramatically reducing model size and compute requirements.
NVIDIA TensorRT Model Optimization Toolkit - NVIDIA TensorRT includes model distillation alongside pruning and quantization to optimize AI models for fast inference on GPUs, edge devices, and embedded systems. It is widely used in production environments where performance and latency are critical.

ChatGPT Users by Country: India leads the Chart.

India has become one of OpenAI’s most critical growth markets, with CEO Sam Altman revealing that ChatGPT now has 100 million weekly active users in the country, making it the platform’s second-largest user base after the United States and accounting for over 11% of its nearly 900 million global weekly users.

Adoption has been driven largely by students, India has the highest number of student users globally, and is supported by OpenAI’s localization efforts, including opening a New Delhi office in 2025 and offering low-cost or free access tiers tailored to India’s price-sensitive market. With more than 1 billion internet users, India represents a massive expansion opportunity, and OpenAI is planning new partnerships with the government to accelerate adoption and infrastructure development. The rapid growth highlights India’s emerging influence in shaping global AI deployment, as major competitors like Google also aggressively target the region, positioning India as a central battleground for the next phase of AI expansion.

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