As far as I can tell, neither of the frontier US labs have referred to distillation as "stealing", but someone please provide a link if I'm wrong.
They do claim that it violates their ToS, which we can assume is simply correct, since they get to put whatever they want in their ToS.
Given all that, I don't know what the fuss is. Are they supposed to not use the advances that were openly published by Chinese labs? The entire industry is built on a discovery made at Google, which was published openly. Should Chinese labs therefore not use transformers? Should US labs not try to prevent distillation of their models?