This line of thinking makes no sense because it assumes that labs that distill from frontier models are doing nothing else. It's the classic "the Chinese can only copy" mentality, and it's going to end poorly for American companies.

I'm pretty sure that all labs are distilling each others' LLMs, maybe apart from Anthropic and OpenAI. It would be stupid not to do it, because it's cheap and effective. But that's not the only thing they're doing. If you think K3 and GLM-5.2 got this good only from distilling frontier models, you're not paying attention to Chinese labs' publications.