Anthropic's crackdown on distillation came with a price tag, Reuters reported on Thursday: the paying accounts the company has cut off accounted for between 5% and 7% of its revenue in the first nine months of 2026, according to investors briefed at an investor meeting in San Francisco last week. Anthropic alleges those accounts were not ordinary customers but Chinese AI labs quietly mining Claude's outputs to train competing models.

The technique, distillation, has a student model learn from a teacher model's outputs. Anthropic said in February that DeepSeek, Moonshot and MiniMax had generated more than 16 million interactions with Claude through roughly 24,000 fake accounts, in violation of its terms. Earlier this month it rolled out new defenses — access restrictions, proxy blocking and bans on tens of thousands of accounts — which it says have cut the reasoning data being siphoned by 90% to 99% (covered here on October 12).

Anthropic frames the practice as intellectual-property loss with national-security implications, and it is telling investors the crackdown has effectively stopped Chinese developers from distilling its models. The disclosure also hands the company an explanation for a month-to-month growth deceleration investors were already nervous about, weeks ahead of what could be the largest IPO in history.