Apps / Software Tools Artificial Intelligence Technology

add

TL;DR

DeepSeek, a Chinese AI startup founded in 2023 by Liang Wenfeng, has rapidly ascended in the tech world with its cost-effective and efficient AI models helping it surge past ChatGPT in Jan 2025 to become the #1 downloaded free app in Apple’s App Store. Supposedly developed with a meager budget of just $6 million, DeepSeek’s R1 model rivals industry giants like OpenAI’s ChatGPT, which had significantly higher development costs (we are guessing in the hundreds of millions or billions of dollars range). However, DeepSeek is now under scrutiny for allegedly using OpenAI’s technology without permission, raising concerns about intellectual property theft and national security. The U.S. Navy has restricted its personnel from using DeepSeek’s app due to security fears, and investigations are ongoing.

DeepSeek’s Meteoric Rise

In the ever-evolving tech landscape, few stories have been as electrifying as DeepSeek’s. This Chinese AI startup has made headlines by developing AI models that rival industry giants, all while operating on a fraction of the budget. Their secret sauce? Innovative programming and efficient use of resources. But as the saying goes, “With great power comes great scrutiny.”

Shortly after DeepSeek became the most downloaded app in the App Store (surpassing ChatGPT) and it became known that the open-source DeepSeek was developed for a tiny fraction of the cost of OpenAI’s ChatGPT, Nvidia’s market capitalization took a steep nose dive with the single biggest one-day drop in valuation of  any company EVER, wiping out nearly $600 Billion dollars in shareholder value virtually overnight. 

Humble Beginnings and Rapid Growth

DeepSeek emerged as a serious player in the AI arms race in 2023. Founded by Liang Wenfeng, a millennial hedge fund entrepreneur from Guangdong, China, the company quickly gained traction by offering cost-effective AI models that rival those developed by OpenAI, Google DeepMind, and Anthropic. Unlike OpenAI, which spent billions developing ChatGPT, DeepSeek reportedly developed its competing model for a fraction of the cost—estimates suggest it cost around $6 million compared to OpenAI’s multi-billion-dollar budget for its GPT models.

The Cost Comparison: DeepSeek vs. ChatGPT

The efficiency of DeepSeek’s development process is remarkable. While OpenAI has invested heavily in infrastructure, computing power, and partnerships with Microsoft to power its AI, DeepSeek has leveraged cutting-edge optimizations to train its model on significantly fewer resources. Some experts believe this efficiency stems from a combination of distillation techniques, synthetic training data, and strategic use of existing AI models. However, this has raised red flags about whether DeepSeek’s models were developed independently or built by distilling responses from OpenAI’s GPT models—an act that would violate OpenAI’s policies.

The Day DeepSeek Surpassed ChatGPT

One of the biggest milestones for DeepSeek came when it surpassed ChatGPT as the most downloaded app in the Apple App Store. By January 27, 2025, DeepSeek’s AI-powered chatbot app skyrocketed to the number one spot in multiple countries, overtaking OpenAI’s ChatGPT for the first time. The app’s success was attributed to its seamless integration with popular messaging apps, its multilingual capabilities, and its promise of higher efficiency at a lower cost.

Industry experts were quick to analyze what led to this viral success. Unlike ChatGPT, which operates on a subscription model for premium features, DeepSeek offered an ad-supported free version with nearly the same capabilities as ChatGPT-4 Turbo. This, combined with its ability to handle voice and image-based prompts with greater speed, led to a massive user adoption surge. The milestone not only cemented DeepSeek’s position as a serious contender but also intensified scrutiny over its technology and business practices.

Meet Liang Wenfeng, The Mysterious Billionaire Founder of DeepSeek:

Just who is this rising star in the AI world and how did he manage to catapult DeepSeek so quickly into the spotlight?

Read our full profile of this up-and-coming AI Tech Titan here. 

Allegations of Intellectual Property Misuse

OpenAI, the powerhouse behind ChatGPT, suspects that DeepSeek might have taken a few shortcuts on their path to success. Specifically, OpenAI alleges that DeepSeek employed a technique known as “distillation,” which involves creating smaller, efficient AI models based on the output from more advanced models. This method, while common in AI development, is prohibited by OpenAI’s terms of service when used to replicate their models.

According to reports, security researchers at Microsoft discovered that individuals linked to DeepSeek were harvesting vast amounts of data through OpenAI’s API, potentially violating terms of service. This has led to an ongoing investigation into whether any unauthorized activity took place.

National Security Concerns

The U.S. Navy has officially restricted its personnel from using DeepSeek’s AI app, citing concerns over data security and potential risks associated with foreign AI applications. According to statements from U.S. military officials, the use of DeepSeek could expose sensitive information to Chinese government oversight, similar to past concerns raised about TikTok. The move aligns with growing caution around foreign AI technologies that collect vast amounts of user data.

Industry Reactions

The tech community is abuzz with reactions. OpenAI’s CEO, Sam Altman, has acknowledged DeepSeek’s model as “impressive,” while expressing concerns about the potential misuse of AI technology, though no direct quote has been verified.

Meanwhile, Chinese AI experts have defended DeepSeek, arguing that it has independently developed its models and that the accusations are politically motivated. Some argue that OpenAI’s claims could be part of a larger strategy to curb competition from foreign AI firms.

Looking Ahead

As investigations continue, the DeepSeek saga serves as a stark reminder of the challenges in the rapidly advancing field of AI. Balancing innovation with ethical considerations and security is paramount. The tech world will be watching closely to see how this unfolds and what it means for the future of AI development.

Sources:

• OpenAI says it has proof DeepSeek used its technology to develop its AI model. New York Post
• OpenAI ‘reviewing’ allegations that its AI models were used to make DeepSeek. The Guardian
• DeepSeek overtakes ChatGPT as the most downloaded AI app. France24
• OpenAI Is Probing Whether DeepSeek Used Its Models to Train New Chatbot. The Wall Street Journal
• U.S. Navy restricts use of DeepSeek AI over security fears. CNBC
• U.S. Navy bans members from using China’s DeepSeek AI app out of security fears. New York Post

What are your thoughts on the DeepSeek controversy? Do you think stricter regulations are needed in the AI industry? Share your opinions in the comments below!