Alibaba has banned its employees from using Claude Code internally, beginning July 10 2026, classifying it as a high-risk tool that risks organizational security, and workers are advised to use the company's own Qoder AI assistant instead. The controversy stems from developers reverse-engineering Claude Code, revealing it contained code to identify Chinese users, including checks for Chinese system time zones, proxy servers, AI lab infrastructure and network characteristics. Anthropic stated this experimental feature launched in March, and was designed to combat unauthorized resellers, prevent account abuse and protect its models from AI distillation, though the spyware was reportedly hidden using obfuscation and steganographic techniques. This follows Anthropic recently accusing Alibaba of conducting the largest known model distillation attack against Claude. Alibaba and Anthropic haven't publicly commented on this matter as yet.