China investigates AI firms DeepSeek and Moonshot AI over data security

The Cyberspace Administration of China (CAC) has launched an investigation into prominent domestic artificial intelligence firms DeepSeek and Moonshot AI. The probe follows allegations from the American AI laboratory Anthropic, which accused several Chinese companies of illicitly using distillation techniques—training smaller models using the outputs of more powerful ones—to replicate Claude’s capabilities.

While the accusations of technological theft from Anthropic are notable, the Chinese regulator is primarily focused on potential data leaks. Investigators are examining whether sensitive information belonging to the Chinese military, police, or state-linked enterprises has been transferred to servers located in the United States. Agents have reportedly visited the offices of both DeepSeek and Moonshot AI to interview executives and employees, though no formal sanctions have been announced at this time.