DeepSeep-R1 chatbot, a groundbreaking innovation in the AI world, has recently caused an uproar in both the finance and technology markets. Created in 2023, this Chinese startup quickly overtook its competitors, including ChatGPT, and became the #1 app in AppStore in several countries.
DeepSeek wins users with its low price, being the first advanced AI system available for free. Other similar large language models (LLMs), such as OpenAI o1 and Claude Sonnet, are currently pre-paid.
According to DeepSeek’s developers, the cost of training their model was only $6 million, a revolutionary small sum, compared to its competitors. Additionally, the model was trained using Nvidia H800 chips – a simplified version of the H100 NVL graphics accelerator, which is allowed for export to China under US restrictions on selling advanced technologies to the PRC. The success of an app developed under conditions of limited resources, as its developers claim, became a “hot topic” for discussion among AI and business experts. Nevertheless, some cybersecurity specialists point out possible threats that DeepSeek might carry within it.
The danger of losing investments by large technology companies is currently among the most pressing topics. Since the large language model DeepSeek-R1 first became public (January 20th, 2025), its unprecedented success caused the shares of the companies that invested in AI development to fall.
Charu Chanana, chief investment strategist at Saxo Markets, indicated: “The emergence of China’s DeepSeek indicates that competition is intensifying, and although it may not pose a significant threat now, future competitors will evolve faster and challenge the established companies more quickly. Earnings this week will be a huge test.”
Notably, DeepSeek was released to public use almost exactly after the Stargate, which was supposed to become “the biggest AI infrastructure project in history so far” with over $500 billion in funding was announced by Donald Trump. Such timing could be seen as a deliberate attempt to discredit the U.S. efforts in the AI technologies field, not to let Washington gain an advantage in the market. Neal Khosla, a founder of Curai Health, which uses AI to improve the level of medical assistance, called DeepSeek “ccp [Chinese Communist Party] state psyop + economic warfare to make American AI unprofitable”.
Some tech experts’ skepticism about the announced training cost and equipment used to develop DeepSeek might support this theory. In this context, some users’ accounting of DeepSeek allegedly identifying itself as ChatGPT also raises suspicion.
Mike Cook, a researcher at King’s College London specializing in AI, commented on the topic: “Obviously, the model is seeing raw responses from ChatGPT at some point, but it’s not clear where that is. It could be ‘accidental’, but unfortunately, we have seen instances of people directly training their models on the outputs of other models to try and piggyback off their knowledge.”
Some analysts also find a connection between the app’s founder, Liang Wenfeng, and the Chinese Communist Party. Olexiy Minakov, an expert in communication and AI, shared his concern with the app’s fast success in this context: “Nobody reads the terms of use and privacy policy, happily downloading a completely free app (here it is appropriate to recall the proverb about free cheese and a mousetrap). And then your data is stored and available to the Chinese government as you interact with this app, congratulations”
DeepSeek’s privacy policy, according to which the users’ data is stored on servers in China
The potentially indefinite retention period for users’ personal information and ambiguous wording regarding data retention for users who have violated the app’s terms of use may also raise questions. According to its privacy policy, DeepSeek can remove information from public access, but retain it for internal investigations.
Another threat lurking within DeepSeek is the censorship and bias of the information it provides.
The app is hiding or providing deliberately false information on some topics, demonstrating the danger that AI technologies developed by authoritarian states might bring, and the influence they could have on the information space.
Despite the havoc that DeepSeek’s release caused, some experts demonstrate skepticism when talking about the app’s success and the possibility of China delivering new groundbreaking inventions in the AI field soon. For example, the task of supporting and increasing the algorithms’ capacities might be a challenge if the technological restrictions for China are not lifted and AI technologies continue to evolve at the same fast pace. Stacy Rasgon, an analyst at Bernstein, called the panic around DeepState “overblown”. In his opinion, the AI market will keep receiving investments, and there will still be a need for data chips and data centres.
Overall, the economic and technological fluctuations caused by DeepSeek may indeed prove to be a temporary phenomenon. Despite its current innovativeness, the app’s “success story”still has significant gaps. Not only does it concern the ideology of the app’s creators and the truthfulness of their “lesser resources” development story. It is also a question of whether DeepSeek will prove to be resilient in the face of the market’s demands, and its ability to keep up and overrun its competitors.
Viktoriia Odusanvo
