Whoa there: Distillation isn't illegal. Who said it was?
That has yet to be decided in court. At best it's a violation of the terms of service, but the only restitution for such a violation is termination of service and by then it's too late.
Remember: Distillation is literally just giving the AI a prompt and seeing what it spits out. If that were illegal, we'd all be guilty whenever we used AI.
Examining your competitors doing business is as old as business.
