German Regulators Warn Apple Google Over Deepseek Data Concerns

German regulators have issued a warning to Apple and Google regarding the availability of the Chinese AI tool Deepseek on their app stores. The warning comes as a result of concerns that the platform may be sharing user data with the Chinese government. The German privacy regulator, Berlin, had previously asked Deepseek to withdraw its app from German app stores in May or introduce adequate data safeguards to protect local users’ data.

This warning follows a broader European concern about the data security risks posed by Deepseek. In early February, privacy regulators across Europe discussed the potential risks associated with the AI tool. Italy had already banned the chatbot due to its lack of transparency in handling user data. Other countries, including France, the Netherlands, Belgium, and Luxembourg, also expressed concerns over the app’s data collection practices. The meeting concluded with a warning that further action could be taken against the platform, leading to Germany's recent pressure on Apple and Google to remove the app from their stores.

Meike Kamp, the Berlin data protection commissioner, commented on the situation, stating that Chinese authorities have extensive rights to access personal data. She emphasized that Deepseek users do not have enforceable rights and effective legal remedies available to them in China, unlike the guarantees provided in the European Union. Kamp urged both Apple and Google to promptly address the notice and determine how they will comply with the regulations.

Despite the option to impose a fine on Deepseek, Kamp chose not to, acknowledging that such a penalty could not be enforced in China. This decision highlights the complexities of regulating international tech companies and the challenges of enforcing data protection laws across borders.

Meanwhile, Deepseek has yet to clarify the release of its R2 model, which has been highly anticipated following the success of its R1 language model. The R1 model is seen as a cost-effective rival to larger US systems. CEO Liang Wenfeng expressed dissatisfaction with R2’s current performance, which may explain the delayed release. Users had hoped for a May rollout, but the release has been stalled due to difficulties obtaining Nvidia server chips.

Staff working in Chinese cloud platforms providing DeepSeek models to businesses revealed that the release of R2 was delayed due to tightened US export policies. They believe that increased demand for the new model would strain cloud firms that need Nvidia chips to run AI models. The platform’s R1 model still heavily depends on Nvidia’s H20 chips. Deepseek has maintained contact with Chinese cloud companies, providing direction on technical requirements to help them prepare for model deployment and distribution.

China’s Cloud companies are not the only ones affected by the export restrictions. Nvidia’s billionaire chief executive, Jensen Huang, claimed that the company may have to take a $5.5 billion loss on the H20 AI chips meant for the Chinese market to maintain compliance. He urged the US government to reconsider its chip ban and allow the company to regain the Chinese market, arguing that if the US wants to lead in tech, it should maximize its output rather than lower it.

Currently, Nvidia controls only about 50% of the Chinese market, down from about 95% at the start of Biden’s administration in 2021. This shift highlights the impact of US export policies on the tech industry and the challenges faced by companies operating in a global market.