Alibaba loses HK$88 billion in market value after Anthropic accuses it of AI theft

Anthropic's accusation that Alibaba ran the largest AI model theft operation ever discovered erased HK$88 billion ($11.3 billion) from the Chinese company's market value on Thursday, sending shares to a 16-month low.

Alibaba Group Holding (HKG:9988) closed at HK$95.00 in Hong Kong, down 4.43%, after hitting an intraday low of HK$94.00. Trading volume surged 51% above the average, with 141.4 million shares changing hands.

The stock has now lost 33% of its value this year. The selloff followed Anthropic's June 10 letter to U.S. Senators Tim Scott and Elizabeth Warren, which CNBC confirmed Wednesday.

Anthropic said operators linked to Alibaba and its Qwen AI lab used nearly 25,000 fraudulent accounts to generate 28.8 million exchanges with Claude between April 22 and June 5. The company called it "the largest known distillation attack on Anthropic to date."

Distillation is a standard AI training technique where a weaker model learns from a stronger model's outputs. Anthropic argued the Alibaba operation crossed into theft, letting the Chinese company replicate Claude's capabilities faster and cheaper than developing them independently. The timing compounds the damage.

Alibaba has staked its growth story on AI and cloud computing. In the March quarter, AI-related products accounted for 30% of Alibaba Cloud's external revenue. CEO Eddie Wu told analysts the payoff from AI spending was "increasingly clear" and "beginning to pay off commercially," with market share as the priority and margin "still secondary."

The company expects AI revenue to top half of external cloud revenue within a year. The accusation also lands as Alibaba fights a separate U.S. security designation. On June 23, the company sued the U.S. Department of Defense after being added to the Pentagon's list of "Chinese military companies," calling the label "no basis in fact or law" and stating its products are not made for "weapons, defense, or intelligence."

Starting this month, the Pentagon is barred from contracting with listed firms. That ban expands in 2027 to bar purchasing their goods through third-party vendors.

Anthropic policy chief Sarah Heck told Congress new laws are needed to sanction distillation operations and restrict China's access to U.S. advanced AI systems, according to a memo reported by Business Insider. The claimed Alibaba operation is 1.8 times larger than the 16 million-plus exchanges Anthropic reported in February from DeepSeek, Moonshot AI, and MiniMax, which used about 24,000 fake accounts combined. DeepSeek's earlier campaign involved over 150,000 exchanges, while Moonshot AI hit 3.4 million and MiniMax over 13 million.

The selloff spilled over to other Chinese AI-linked stocks. Xiaomi Corp. and Baidu Inc. both dropped more than 3% in Hong Kong.