Elon Musk testifies that xAI trained Grok on OpenAI models (3 minute read)

Elon Musk confirmed in court testimony that xAI used distillation techniques to train Grok on OpenAI models, publicly validating what many in the industry suspected U.S. AI labs do to each other.

What: During testimony in his lawsuit against OpenAI, Musk admitted xAI trained its Grok model partly through distillation—systematically querying OpenAI's models to understand and replicate their capabilities. While OpenAI and Anthropic have publicly condemned distillation (especially by Chinese firms), this is the first confirmed case of U.S. labs using the practice on each other.

Why it matters: Distillation undermines the competitive moat that AI giants built through massive infrastructure investments by letting smaller companies create comparable models cheaply. The admission also highlights industry hypocrisy, as frontier labs that allegedly bent copyright rules to gather training data are now fighting to protect their own model outputs through terms of service enforcement rather than legal prohibition.

Deep dive

Musk stated xAI used distillation "partly" on OpenAI models and characterized it as a general practice among AI companies, though this is the first public confirmation from a major lab
Distillation threatens the fundamental business model of frontier AI labs by allowing competitors to replicate years of compute investment through systematic querying rather than building from scratch
OpenAI, Anthropic, and Google are collaborating through the Frontier Model Forum to combat distillation attempts, particularly from China, by detecting and blocking suspicious mass queries
The legal status of distillation remains unclear—it likely violates terms of service but may not be explicitly illegal, unlike the copyright violations frontier labs allegedly committed during their own training
xAI launched in 2023, years behind OpenAI, making it logical they would use shortcuts to catch up rather than starting from zero
During the same testimony, Musk ranked current AI leaders as: Anthropic first, followed by OpenAI, Google, and Chinese open-source models, with xAI characterized as much smaller with only a few hundred employees
The testimony occurred during Musk's lawsuit alleging OpenAI breached its original nonprofit mission by shifting to a for-profit structure
OpenAI did not respond to requests for comment on the admission

Decoder

Distillation: Training new AI models by systematically querying existing models through their APIs or chatbots to understand and replicate their behavior, creating comparable capability at much lower cost than building from scratch
Frontier labs: Leading AI companies like OpenAI, Anthropic, and Google that are pushing the boundaries of AI capability
Compute infrastructure: The expensive data centers and specialized hardware (GPUs, TPUs) required to train large language models from scratch

Original article

OpenAI and Anthropic have been on the warpath lately against third-party efforts to train new AI models by prompting their publicly accessible chatbots and APIs, a process known as "distillation."

That conversation has focused on Chinese firms using distillation to create open-weight models that are nearly as capable as U.S. offerings, but available at a much lower cost. However, tech workers have widely assumed that American labs use these techniques on each other to avoid falling behind competitors.

Now we know it's true in at least one case: On the stand in a California federal court on Thursday, Elon Musk was asked if xAI has used distillation techniques on OpenAI models to train Grok, and he asserted it was a general practice among AI companies. Asked if that meant "yes," he said, "Partly."

Musk is in the process of suing OpenAI, CEO Sam Altman, and Greg Brockman, alleging they breached the original nonprofit mission for OpenAI by shifting the entity to a for-profit structure. That trial began this week, featuring testimony from the tech leader.

Musk's admission is notable because distillation threatens AI giants by undermining the advantage they've built by investing in compute infrastructure. This allows other software makers to create models that are nearly as capable on the cheap. There's no small amount of irony here, given the bending and alleged breaking of copyright rules by frontier labs in their search for sufficient data to train their models.

It's no surprise that Musk's xAI, which started in 2023, years after OpenAI, would try to learn from the then-leader in the field. It's not clear that distillation is explicitly illegal, but rather may violate the terms of service companies set for the user of their products.

OpenAI, Anthropic, and Google have reportedly launched an initiative through the Frontier Model Forum to share information about how to combat distillation attempts from China. These typically involve systematic querying of models to understand their inner workings. To stop the efforts, frontier labs are working to prevent users from making suspicious mass queries.

OpenAI did not respond to a request for comment on Musk's admission at press time.

Later in his testimony, Musk was asked about a claim he made last summer that xAI would soon be far beyond any company besides Google. In response, he ranked the world's leading AI providers, saying Anthropic held the top spot, followed by OpenAI, Google, and Chinese open source models. He characterized xAI as a much smaller company with just a few hundred employees.