Breaking Barriers in AI Development
DeepSeek: AI Innovator or Unchecked Tech? This question is in the trillion dollar question of the finance and tech markets right now. Do you have an opinion about it? Are forming your opinion about it? This article is about the background story and the continuation of it into the future.
DeepSeek AI, a Chinese artificial intelligence startup, has been making waves in the tech industry over the past month. In celebration of the Chinese New Year, DeepSeek was among three AI labs based in China that claimed to develop AI models at a significantly lower cost—despite the new U.S. restrictions on hardware purchases.[1] According to Baylor University’s AI Lab, “The DeepSeek-R1 model performs at the level of OpenAI’s top-tier reasoning models, yet was trained at just $5.6 million—a staggering 95% cost reduction compared to OpenAI’s estimated $100+ million in training costs.”
AI Industry and Financial Markets Disruptions
Shortly after this announcement, industry leaders such as Nvidia saw a noticeable decline in stock prices. As of January 27, these shifts were not limited to the stock market; the crypto- currency market also reacted. Bitcoin suffered losses that were “seemingly driven by some risk-off sentiment circulating the markets currently due to DeepSeek,” wrote eToro analyst Simon Peters.[2]
This market turbulence largely stems from DeepSeek’s controversial approach to AI development, which pushes ethical boundaries and impacts AI-driven industries such as finance, healthcare, and automation. Some critics argue that DeepSeek achieves these advancements by leveraging data from major tech companies like Google, OpenAI, Meta, and Nvidia—firms that have invested heavily in intellectual property and AI research.[3] The question remains: is DeepSeek truly outperforming these models through superior efficiency, or does it hold an unfair advantage by capitalizing on readily available AI knowledge?
Navigating the Shadow of the Chinese Government
Investors are enticed by DeepSeek’s claims of producing high-performance AI software and hardware at a fraction of the know cost by OpenAI, Anthropic, xAI, or similar others. However, given the Chinese government’s tight control over the media, skepticism remains regarding the veracity of these claims. Even if DeepSeek’s success is legitimate, the ethical dilemma persists—if AI companies merely refine existing innovations rather than creating new concepts, can they truly be considered groundbreaking? More importantly, should the industry condone AI firms that potentially infringe upon the intellectual property of companies that invested billions into development?
Regulatory Scrutiny and Ethical Concerns
Beyond financial implications, the European Union has raised concerns about the rapid expansion of AI and the necessity for strict adherence to data protection regulations such as the General Data Protection Regulation (GDPR). A key issue with rapidly growing, low-cost AI firms is the temptation to cut corners on fundamental safety and security measures.[4] American AI firms have flagged DeepSeek’s technology as potentially vulnerable to generating abusive or violent content due to weak safeguards within its code.[5] Of course these claims need to be validated or not, with time and use.
Global Data Privacy and Compliance Issues
From faulty code to concerns about spyware vulnerabilities, DeepSeek’s practices were a focal point of discussion at the 2025 AI Summit in France on February 12. The French Data Protection Agency (CNIL) has raised pressing questions about whether DeepSeek’s model utilizes European personal data for training and if such data could be transferred to China.[6]
Several key GDPR articles that DeepSeek may be violating include:
- Article 49 – Data Transfer to Third Countries
- Article 12 – Lack of Transparency
- Article 22 – Profiling and Automated Decision-Making
- Article 5 – Insufficient Data Minimization
Several European data protection authorities, including the Italian Data Protection Authority (DPA), have launched investigations into DeepSeek’s data handling practices, emphasizing growing concerns over compliance with GDPR regulations.[7]
The Future of AI and Ethical Innovation
As DeepSeek AI continues its rapid ascent, the debate surrounding ethical AI development, data privacy, and fair competition intensifies. While the company’s technological advancements are undeniably impressive, the long-term consequences of its approach—both in market disruption and regulatory scrutiny—will shape the global AI landscape for years to come. The world is watching closely to see whether DeepSeek will prove itself as a true innovator or a cautionary tale of unregulated AI expansion.
[1] https://www.csis.org/analysis/deepseeks-latest-breakthrough-redefining-ai-race
[2] https://www.reuters.com/technology/bitcoin-drops-11-day-low-amid-tech-selloff-2025-01-27
[3]https://www.forbes.com/sites/jasonsnyder/2025/01/27/genius-steals-how-deepseek-built-on-ais-innovation-debt/
[4]https://www.csis.org/analysis/deepseek-problem-or-opportunity-europe#:~:text=Against%20this%20background%2C%20European%20officials,models%E2%80%9D%20as%20fast%20as%20possible
[5] Ibid.
[6]https://www.reuters.com/world/europe/europes-privacy-watchdogs-discuss-deepseek-tuesday-meeting-2025-02-10/
[7] Ibid.
