Anthropic puts model distillation at 5–7% of revenue

On TBPN, the hosts discussed figures presented at Anthropic’s Investor Day and the effect of its efforts to combat unauthorized model distillation. One host said the company’s Q3 revenue was $16.8 billion and annualized the quarterly figure to about $67 billion. In another passage, he gave the figure as $67.2 billion. That is roughly ten times the level a year earlier, but, in his assessment, the market had expected a stronger result and may have been looking for $90 billion.

The hosts said Anthropic estimates that distillation accounts for 5–7% of its revenue. The host stressed that this was the company’s estimate, not an independently verified measure of losses. He described the potential impact as worth billions and suggested that combating distillation could weigh on near-term revenue growth while limiting the emergence of competing models over the longer term. According to the host, Anthropic said it had deployed its own frontier technology and believed it could stop distillation.

The discussion raised the possibility that operators could disguise large-scale querying as ordinary use—for example, by setting up hundreds of Max accounts, each with its own VPN, or by using third-party SaaS wrappers that route requests to model APIs. The hosts said such arrangements could make detection difficult: a model provider might see many requests coming from a seemingly legitimate company, while the wrapper itself might not be able to inspect document contents. These examples and their scale were presented as the hosts’ theories, not as verified facts about specific companies.

The hosts also considered whether Meta would be willing and able to fight distillation. One host speculated that Meta might have advantages in bot detection, but also said the company might be less concerned about strong open models because of its distribution channels. A participant said Meta had released the open model MuseSpark Open that day. In the participant’s view, this suggested Meta might have a different attitude toward the risk of an open model emerging through distillation. A host also argued that a model not attracting distillation attempts might not be at the frontier; this was his opinion, not an established definition.