Anthropic is guilty of regulatory capture — they could stop distillation themselves by KYC-ing their customers, but they'd rather push for a ban on competitors than slow their growth.
Sacks argues that if distillation were truly a national security threat, Anthropic would block Chinese access to its own models at the source rather than seeking government protection against American open-source developers. ✦ AI generated
David Sacks · All-In Podcast · 2026-07-24 · original ↗
starts at this moment · 5:00
The tell on this, the way that you know that this whole distillation thing is fake is because if stopping distillation was their primary objective, Anthropic would push to ban Chinese access to American models, not American access to Chinese models. ... they're the ones in the best position to block it. If distillation, if industrial scale distillation is a national security threat, they're the ones who need to stop it because that is the place where distillation occurs. You have to stop it at the source. Once you allow Chinese companies to distill, the horse is out of the barn. ... the reality is that I think that what's happening here is that in their lust for growth, Anthropic has done a very poor job at stopping distillation.
verbatim transcript · starts at 5:00
4:40to spite our face. I mean, obviously, >> American companies have to be able to use everything that's in the public domain because the rest of the world will be using those things. And let me just say, I've said for a while that Anthropic is guilty of regulatory capture, of attempts to seek government protection. This is a company that is the fastest growing tech company at scale in history. They started the year
5:02at 10 billion of ARR. They're now over 70 billion of ARR. This is not a company that needs government protection. This is not a company that is under threat from competitors or or whether they're Chinese or otherwise. And yet they have been very successful at trying to panic everybody into thinking that they need some sort of government protection. And the tell on this, the way that you know
5:24that this whole distillation thing is fake is because if stopping distillation was their primary objective, Anthropic would push to ban Chinese access to American models, not American access to Chinese models. >> Yes, they could. And that is that is achievable. They could block it. So >> they're the ones in the best position to block it. If distillation, if industrial scale distillation is a national security threat, they're the ones who
5:52need to stop it because that is the place where distillation occurs. You have to stop it at the source. Once you allow Chinese companies to distill, the horse is out of the barn. >> Yeah. >> And the reality is that I think that what's happening here is that in their lust for growth, Anthropic has done a very poor job at stopping distillation. I mean they're saying that distillation
6:15is occurring at industrial scale. Okay, if it's industrial scale, it must be pretty obvious to see. So is waves of accounts being created by students rolled up and sold on the dark web, you know, in those kind of channels. So you got people in Manila, in the Philippines, I understand, and India signing up for all those accounts and then sending them to the dark web and selling them using IP addresses from
6:40America. Yeah. So that that's how it occurs. But the more the more industrial scale it is, the more obvious it is to see. And Tamatha has been saying for a while, why don't you KYC your customers? Well, they know that if they KYC their customers, it'll slow their growth. So instead, what they're saying is, hey, ban our competitors. Well, >> that's ridiculous. I mean, they're in the best position to stop the
7:02distillation. I think that they're negligent about doing that. or I mean if they really think it's that big a threat, they should use a few points of their 90% gross margins to do that. What you don't do is then say that American developers cannot use everything that's in the public domain. So it seems it seems to me that this debate is all backwards that the question should be on
7:25Anthropic to explain why it's doing such a bad job, not on the whole American open source ecosystem to be punished for Anthropic's failure. All right, Freberg, I have a really good question for you, but before we do that, Shimath, can you give me maybe a little bit of what you're hearing on your sales calls for 8090? You're talking to enterprises. They're hearing all these reports, whether it's