Y Combinator CEO Garry Tan is advocating for a decentralized AI ecosystem by encouraging U.S. open-weight AI labs to employ distillation techniques on frontier models. Distillation involves using extensive prompting on a target model to extract its reasoning capabilities and knowledge for training new models. While Anthropic CEO Dario Amodei has called for regulatory crackdowns on what the company describes as "illicit distillation attacks" by Chinese labs—alleging the use of stolen credentials and fraud—Tan argues that U.S. labs should be allowed to perform legitimate distillation to foster a robust domestic open-weight landscape. Tan contends that restricting how customers utilize API calls to closed-weight models is overly constraining, noting that proprietary labs themselves utilized vast amounts of public and copyrighted data without explicit permission during initial training. His primary concern is preventing a "monolithic" AI monopoly where a single provider dominates the market through superior capital and research access. Instead, Tan envisions a balanced ecosystem where frontier labs drive innovation while open-weight models provide widespread access and freedom, preventing a singular, centralized power structure from controlling advanced intelligence.