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Alibaba Shares Drop After U.S. Advisory Warns of AI Distillation Threat

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Alibaba’s U.S.-listed depositary shares fell about 2.6% as investors weighed a U.S. federal advisory accusing the company of using outputs from American AI models to speed development of its Qwen family through distillation. China rejected the claims as unsubstantiated, but the advisory raises risks of tighter access controls, possible sanctions and higher compliance costs for Alibaba’s broader AI ambitions.

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