Episode Details

Good day, humans. Today is a study in people saying one thing and doing the other. Anthropic and OpenAI are telling senators that Chinese labs are siphoning their models through tens of thousands of fake accounts — while selling those same conglomerates frontier AI through Singapore. Elon Musk called Anthropic the clear leader in AI, then told Tesla to stop using it. Also on the docket: Ant Group gave away an hour-long world model, and Christopher Nolan says Gen Z is done with slop.

The Distillation Complaint That Comes With a Side Door

Source: Reuters

What happened: Yesterday we told you Alibaba had banned Claude Code inside its own walls. Today the other half of that story landed. Anthropic has told Senators Tim Scott and Elizabeth Warren that individuals linked to Alibaba ran roughly 25,000 fraudulent accounts and generated more than 28.8 million exchanges with Claude between April 22 and June 5 — what the company calls the largest operation ever to unlawfully extract Claude’s capabilities. OpenAI says it has seen the same thing aimed at its own models.

Why it matters: "Distillation" means copying a smart model by asking it millions of questions and training a cheaper model on the answers. It is the AI equivalent of photographing every page of a book instead of buying it — and it means the most expensive part of building a frontier model can be skipped entirely by anyone willing to ignore the terms of service.

What everyone’s saying: The consensus read is that export controls have been aimed at the wrong thing: we spent three years restricting chips while model access stayed wide open. Anthropic, OpenAI and Google are now coordinating through the Frontier Model Forum to detect extraction patterns across all three.

My read between the lines: On July 9 the Financial Times reported (via The Next Web) that OpenAI and Google sell advanced AI services to the Singapore-registered subsidiaries of Alibaba, Baidu and Tencent — the same conglomerates sitting on the Pentagon’s 1260H list. Mainland China is restricted. Singapore is not. So the labs are lobbying Congress about the back door while staffing a service desk at the side door.

📖 Further reading: The US Government Just Took Anthropic’s Best AI Model Offline — Here’s Why — the export-control fight in this story is the same fight, one step upstream.

Half of today’s brief is people announcing things instead of doing them. Viktor is the other kind. It’s an AI agent that lives in your Slack, connects to 3,000+ tools, and comes back with the finished artifact — the working dashboard, the shipped campaign, the code, the report. Not a chatbot you have to interview. A coworker who already did it. New readers get $50 off their first month. Hire Viktor →

Musk Crowned Anthropic, Then Banned It at Tesla

Source: Electrek

What happened: Elon Musk posted on X that he was "clearly wrong about Anthropic" and that they are "obviously currently the leader in AI" — a full reversal of his September 2025 position. In the same week, per Electrek, he sent Tesla staff a memo instructing them to switch off Claude and onto his own Grok 4.5 "when possible," citi