Anthropic's AI Copycat Crackdown Slows Revenue Ahead of IPO
Anthropic's Q3 revenue hit $16.8B as a 5-7% distillation revenue line starts to shrink; a successful crackdown on AI copycats trims reported growth before a potential $1.5T IPO.
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Anthropic's third-quarter revenue growth decelerated, a development the company partly attributes to its own success in blocking rivals from copying its AI models.
The startup generated $16.8 billion in revenue during the quarter, Business Insider's Stephen Council reported Wednesday. The figure represents a slowdown from earlier in 2025, even though it remains large by any standard.
A portion of the revenue came from a practice called distillation, in which rival AI developers use Anthropic's Claude models to train their own competing systems. The company told prospective investors this week that 5% to 7% of its Q3 revenue came from distillation, according to The Information. Anthropic has repeatedly accused Chinese AI companies of engaging in the practice and has stepped up efforts to block them. The company said those efforts are working.
The math creates an unusual dynamic: stamping out copycats also trims a revenue line. Anthropic told investors that revenue from distillation is expected to decline further, The Information reported. That raises questions about how much of the earlier growth was inflated by rivals paying to exploit the technology.
The situation echoes Twitter's bot problem before its IPO. Twitter disclosed estimates of fake accounts in its filings, which gave investors a clearer picture of user growth. Anthropic could face a similar challenge as it prepares for a public offering that could value the company at $1.5 trillion or more, according to reports.
Investors will need to separate genuine customer demand from revenue generated by rivals trying to reverse-engineer Anthropic's models. A drop in distillation-related revenue does not necessarily mean the underlying business is weakening. It could simply mean fewer competitors are succeeding at theft.
Anthropic did not respond to a request for comment by Thursday morning.
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