American AI Companies Fend Off Chinese Copy Cats & Gen Z Loves Love Island

**SPEAKER_1** (0:00)
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**Neal Freyman** (0:29)
Good Morning Brew Daily Show. I'm Neal Freyman.

**Toby Howell** (0:32)
And I'm Toby Howell.

**Neal Freyman** (0:33)
Today, America is going through a middle-age crisis.

**Toby Howell** (0:36)
Then why Gen Z is obsessed with this reality show.
It's Wednesday, July 8th. Let's ride.

**Neal Freyman** (0:53)
Good morning, the most livable city in the world has been crowned, and Hans Christian Andersen couldn't write a better story. It's Copenhagen, Denmark. Copenhagen beat out Vienna, Austria for the second straight year in the Economist Intelligence Unit's annual global livability index. The ranking examines 173 cities across the world along criteria like stability, aka crime, healthcare, culture, environment, education and infrastructure. So essentially, how pleasant it is to live there. Copenhagen and Vienna are followed in the top 10 by Melbourne, Sydney, Zurich, Geneva, Osaka, Adelaide, Vancouver and Tokyo.
Toby, would you live in Copenhagen? Better hours for the pot at least.

**Toby Howell** (1:32)
Twist my arm. Fine, I'll move to Copenhagen. First thing I did when I saw this list is check out where New York fell. New York is improving, but not by much. It climbed three spots, woo, to number 66, driven by the Knicks win. No, just kidding. The improvement was largely driven by better stability scores thanks to falling crime rates and lower perceived risks of terrorist attacks. So we still have a ways to go. In terms of the highest ranked cities in the US, Honolulu takes the cake at number 25, although it slipped two places. Vancouver was the only North American city to make the global top 10 at number nine. Here's what I noticed of the top 10, only Switzerland advanced past the round of 16 in the World Cup. So you either have livable cities in your country or you're good at football.
Choose your path, I guess.

**Neal Freyman** (2:21)
And now a word from our sponsor, Ultra Running. Toby, where do you like to run?

**Toby Howell** (2:25)
I love running on the beach. I go straight into the water to see how far I can make it on Old Man Poseidon's treadmill.

**Neal Freyman** (2:31)
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**Toby Howell** (2:39)
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**Neal Freyman** (2:52)
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**Toby Howell** (3:04)
AI companies are copying each other's homework and it's turning into a major geopolitical issue. Last month, Anthropic told Congress that the Chinese e-commerce giant Alibaba was copying its models of India, a process known as distillation. Then this week, Alibaba said it will ban its employees from using Anthropics AI tools, the latest chapter in an escalating feud between the US and China for AI supremacy.
Alibaba, Anthropic alleged, created tens of thousands of unauthorized accounts to access Cloud, ask it a bunch of questions, then use the outputs to train its own models. This process of distillation is very much like how I made it through high school.
One model, Neal GPT for instance, is the know-it-all Smarty Pants. The other AI model, Toby GPT, is the free loader. Instead of reading every textbook yourself, the free loader makes the Smarty Pants answer every practice exam and then studies only those answers. It's not a new technique nor is it inherently illegal. Distillation was invented by Google researchers back in the 2010s to create smaller, cheaper and faster AI models. Elon Musk has admitted, generally AI companies distill other AI companies during a testimony in court. But when competitors are distilling proprietary models like Claude or Chatchabee Tea, that's where things get murky. China in particular is apparently distilling at an enormous industrial scale to close the gap with the US. Anthropic claims Chinese companies generated over 16 million Claude conversations using roughly 24,000 accounts to accelerate their own frontier models. Neal, this is the next phase of the AI race. It's not just about who has the best models, but about who can cover their homework from prying eyes.