OpenAI and Google Supply AI Models to Blacklisted Chinese Firms via Singapore
OpenAI and Google confirmed they supplied advanced AI models to Singapore-based subsidiaries of Baidu, Alibaba, and Tencent, companies blacklisted by the U.S. Pentagon for alleged military ties. The companies acknowledged that users affiliated with Alibaba engaged in 'distillation' to steal AI capabilities, and that geographic restrictions alone cannot prevent such abuse.
What happened
OpenAI and Google confirmed they have been supplying advanced AI models to Singapore-based subsidiaries of Baidu, Alibaba, and Tencent, which are blacklisted by the U.S. Pentagon due to alleged connections to China's military.
OpenAI admitted in June 2026 that it suspended access for several Alibaba-affiliated users for engaging in 'distillation,' a practice where developers feed a rival's premium AI outputs into their own lower-tier AI system to rapidly train it and steal its capabilities.
Reported impact
The incident exposed loopholes in U.S. technology controls, as there is no federal ban preventing Chinese-headquartered corporations from purchasing AI software via international subsidiaries.
Google acknowledged that simple geographic sales restrictions are no longer sufficient to entirely halt distillation risks and sophisticated digital espionage.
Index analysis
Both companies defended their international business practices, stating they do not allow direct model access from mainland China and enforce security safeguards for foreign operations.
OpenAI stated: 'We would rather see more of the world using AI shaped by democratic values than AI controlled by autocratic governments. We don't think nationality alone should decide access.' Google confirmed advanced AI services are available in international hubs like Hong Kong and Singapore provided users comply with strict usage policies.
Governance controls
The Pentagon maintains a 1260H blacklist targeting companies suspected of working with the Chinese government and military, though it does not legally prevent these corporations from accessing software tools through international subsidiaries.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.