ON Jan 20, a day when the tech titans of the West were in prominent attendance at Trump’s presidential inauguration, a little known China artificial intelligence (AI) company DeepSeek released an open source version of its R1 model, a technical report as well as licensing for unrestricted commercial use.
This was no ordinary AI app. It matched and surpassed the leading AI app, OpenAI’s ChatGPT, on several key benchmarks. Perhaps most important to ordinary as well as business users of AI apps, it was free and locally deployable.
“Free open source” refers to software that is available for anyone to use, modify and distribute without cost, meaning the source code is publicly accessible and can be changed by anyone, typically under a licence that allows for such modifications and sharing; essentially, it is software where the code is openly available and can be used freely by anyone.
Sputnik moment impact
The response was as if a thunderbolt had been unleashed on the AI tech world in which the US is the dominant player and the world’s leader.
The app immediately became the most downloaded free app in the US and other countries.
According to Bloomberg, DeepSeek’s AI assistant topped the list of most downloaded mobile apps across 140 markets, with India accounting for the largest percentage of new users at the end of January.
It rose to the No.1 spot on Apple Inc’s App Store on Jan 26, and has held that position globally since. The app has also held
the top spot on Alphabet Inc’s Android Play Store in the US since Jan 28.
With 16 million downloads over its first 18 days, the app almost doubled the nine million notched by OpenAI’s ChatGPT when it was first released.
The positive response of AI consumers – researchers, small and big time businesses, professionals and netizens all over the world – stands in contrast to global stock markets where the Chinese low budget AI is causing investors to question everything that they know about AI and related stocks and their valuation.
On Jan 27, the US stock market recomputed the valuation on AI and chip stocks that have been a key player in the US bull market run. The Nasdaq 100 sank 3% while the S&P 500 dropped 1.5%. A closely watched gauge of chipmakers plunged the most since March 2020.
Nvidia, the poster child of America’s AI frenzy, sank 17%. This was the biggest market-cap loss for a single stock ever as investors chewed over the revelation that DeepSeek was developed and operates at a fraction of the billions of dollars that US AI companies such as Meta, Alphabet and others have spent on Nvidia and other chips to upgrade their hardware.
Fast facts
0 77% of devices being used have some form of AI.
0 Nine out of 10 organisations support AI for a competitive advantage.
0 AI is projected to contribute US$15.7 trillion (RM70.15 trillion) to the global economy by 2030.
0 By 2025, AI might eliminate 85 million jobs but create 97 million new ones, resulting in a net gain of 12 million jobs.
0 63% of organisations intend to adopt AI globally within the next three years.
0 AI market size is expected to grow by at least 120% year-over-year.
0 In 2024, the global AI market was projected to grow 33% year- over-year.
0 Only a third of consumers think they are using AI platform while actual usage is 77%.
Another China game changer?
What comes next for DeepSeek may not be up to consumers or the market for AI based in the US and ally countries to decide. Instead, it may be the latest battlefield that the US sees a need to fight to stymie the rise of China as a world power.
It is significant that a day after his inauguration and before the US market meltdown, President Donald Trump announced a
joint venture between OpenAI, SoftBank and Oracle to create up to US$500 billion in computing infrastructure to power AI.
The venture, called Stargate, was to invest in US data centres and servers throughout the country. According to Trump,
this was “the largest AI infrastructure project by far in history” and would keep “the future of technology” in the US.
Following the rout in Wall Street, Trump told a Republican congressional retreat in Miami that he thought the Chinese AI could act as a spur for the US companies to innovate.
“Hopefully, the release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win.
“I would say that could be a positive. So, instead of spending billions and billions, you will spend less, and you will come up with, hopefully, the same solution.”
Despite this initial positive response, Trump may change his mind on welcoming DeepSeek. This is if the anti-China lobby and bandwagon of business interests get their way.
The opening shots of a likely sustained battle that DeepSeek has to fight has already been launched. A widely circulated social media video describes an 83-hour digital war fought by DeepSeek staff and associates during the Chinese New Year period to deal with a large-scale cyber attack emanating from an unknown but highly sophisticated adversary based in the US using
0 phishing emails sent to employees to steal credentials;
0 brute-force attempts to crack passwords and breach firewalls; and 0 injection of malicious data, including ransomware and spyware.
This first threat to DeepSeek was repulsed. What will be more difficult is the emerging alignment of ideological and financial interests that have emerged to ensure that DeepSeek is not only pushed back but brought down. This can be seen in the numerous Western media reports accusing DeepSeek of 0 misleading about its true development cost; 0 intellectual property infringement or theft; 0 operating on restricted AI and smuggled chips; and 0 political bias and control by China.
Defenders of DeepSeek point out that the allegations have little or no substance. They also contend that the main charge levelled by current AI market leader, OpenAI – claiming that DeepSeek has engaged in intellectual property infringement or theft through distillation of data – smacks of hypocrisy and worse, especially since OpenAI is facing more than a dozen copyright lawsuits alleging use of copyright-protected works to train the large-language models used by its ChatGPT.
The most formidable of the criticisms DeepSeek has to deal with is that it is a threat to US national security and world leadership. Among those beating the drums of war against DeepSeek are congressional leaders, entrepreneurs heavily invested in the current AI technology and media “experts” who use loaded questions about Xinjiang, Tibet and other topics to claim that DeepSeek is “incredibly dangerous for free speech” by permitting China to control political narratives and others in the anti-China camp.
Defenders
On DeepSeek’s side, we have seen unexpected support from some key tech leaders. Nvidia’s CEO, Jensen Huang, described DeepSeek’s R1 as “an excellent AI advancement”, although his company and his personal worth were the biggest losers from the Silicon Valley tech rout.
Microsoft’s Satya Nadella praised it for its “real innovations”; OpenAI’s Sam Altman described it as “clearly a great model”; whilst Apple CEO Tim Cook said, “innovation that drives efficiency is a good thing”.
The most important benefit that DeepSeek and other new AI apps, such as Alibaba’s Qwen2.5v-VL, are providing is the democratisation of AI beyond the control of any single country or company.
Providing free open-source AI will be key to levelling the playing field in access to information and skills for everyone with a handphone. This potential is much more than the politics, economics or military implications that US critics of China’s AI are focusing on.
By restricting or banning DeepSeek or in dealing with it as another new cold war front as with Huawei and TikTok previously, the US and its allies want the rest of the world to end as the losers.
Lim Teck Ghee’s Another Take is aimed at demystifying social orthodoxy.
Comments: letters@thesundaily.com
