To make grain-based liquor, you heat a fermented mash in a still until alcohol-rich vapor rises and then cool it back into a stronger liquid. Chemists and whiskey makers know this as distillation. Artificial intelligence developers have borrowed the word to describe boiling down a big AI model into a smaller one—and lately the biggest AI companies say that rivals have been distilling like bootleggers. In September Anthropic and OpenAI each detailed how they caught and killed campaigns to distill their flagship models—that is, to extract enough information from the models to train new models that mimic the originals at...