As some have found, DeepSeek performs well and holds its own against fierce competition, except when you ask the Chinese Artificial Intelligence (AI) startup about the Dalai Lama or the Tiananmen Square incident. In response, it will portray the Buddhist leader as an international conspirator bent on disrupting China’s social and cultural fabric and dismiss the Tiananmen massacre as mere Western imagination.
Of course, DeepSeek can’t be blamed for this since it openly acknowledges its Chinese origins and operates within the boundaries set by the Communist system. Yet, upon release, it topped the list of downloaded apps from the Apple Store. One reason for its popularity was that it was free and could be downloaded in seconds. Whatever the reason, it dealt a severe blow to American companies claiming to have cutting-edge AI technology.
A day after Donald Trump was sworn in as the President of the US, he announced a $500 billion investment in the AI sector, doing so in the presence of top American AI executives to underscore its credibility. It was not a hollow boast. Earlier in January, Microsoft announced plans to invest an additional $80 billion to enhance its AI technology, while Meta pledged $65 billion for the same. It’s too early to say whether these plans have been disrupted by DeepSeek.
What is crystal clear is that the hedge fund-turned-AI startup is now viewed as a Chinese bull in the Silicon Valley shop, to paraphrase. Notably, soon after DeepSeek became available on the Apple Store, Nvidia shares plummeted, marking the biggest single-day loss in American stock market history, wiping out $600 billion from its value. Other giants like Alphabet, Amazon, and Microsoft also saw share prices fall.
Is this the end of America’s AI dominance? It’s premature to say, as Nvidia’s unparalleled technological resources may fuel a swift rebound. However, the real reason for the panic stems from claims that DeepSeek was developed at a fraction of the cost incurred by American giants and requires less computing power and, consequently, less electricity. Both have been major constraints for the US companies. However, Chinese claims can’t be taken at face value, given their reputation for technology theft to cut development costs.
What’s evident is that former US President Joe Biden’s attempt to curb the Chinese AI threat through export restrictions has failed. The only way for the US to stay ahead is by developing far more advanced technologies that China will take time to replicate. Ultimately, in this free-for-all race, better and cheaper technology will prevail. In other words, in this relentless AI race, innovation and efficiency will determine the winners. The US must outpace China’s advancements, proving that leadership comes not from restrictions but from technological superiority.
