DeepSeek juices the geopolitics of AI
DeepSeek, a relatively unknown Chinese artificial intelligence (AI) start-up until late January, has shaken the world with its low-cost, high-power model.
DeepSeek’s success – seen in its recent No. 1 ranking on Apple’s app store– has driven a massive correction in what were stratospherically high valuations of US tech giants exposed to AI. And it’s resetting the US versus China geopolitics of AI.
DeepSeek’s R1 model has claimed to surpass OpenAI’s cutting-edge o1 model family with a much smaller investment and without access to the most advanced chips due to US export controls.
The silver lining of financial and technological scarcity embedded in DeepSeek’s model is that R1 seems to run at a much lower cost and consume much less energy than its American peers.
The takeaway, reflected in the sudden massive correction of some of the US AI giants’ stock market valuations, is that US hegemony in AI is no longer guaranteed. DeepSeek has shown, that with the right talent, a much smaller financial investment can apparently obtain similar results.
Moreover, America’s reliance on export controls to contain China’s technology sector does not seem to be working. Such conclusions should, in principle, be positive for the world given DeepSeek’s promise of massive efficiency gains and related AI commoditization.
The European Union, so far an AI follower rather than leader – as China seemed to be until DeepSeek’s surprise – might create its own homegrown AI platform, which until now seemed impossible based on the sheer amount of investment believed to be needed to develop large language models (LLMs).
While the positive aspects of DeepSeek’s success are undeniable, there are also downsides.
Starting with the technical aspects,