U.S. Probes Chinese AI Giant: DeepSeek's Low-Cost Models Spark Intellectual Property Theft Fears

The U.S. is conducting a national security investigation on DeepSeek, a Chinese AI company that has rapidly gained prominence with its low-cost AI models. The investigation comes amidst concerns about intellectual property theft and the potential impact of DeepSeek's technology on the global AI market.

The U.S. government is particularly concerned about DeepSeek's ability to offer AI services at a fraction of the cost of its competitors. This has raised questions about the sustainability of AI investments and the future of tech and crypto markets. The investigation is focused on determining whether DeepSeek has engaged in intellectual property theft or other illegal activities in the development of its AI models.

The U.S. President, Donald Trump, initially framed DeepSeek as a "positive" development, but the narrative shifted as authorities branded it a potential case of intellectual property theft. White House artificial intelligence and crypto czar David Sacks claimed there is "substantial evidence" that DeepSeek "distilled" knowledge from OpenAI's models, a process he likened to intellectual property theft.

The launch of DeepSeek's R1 model triggered a massive sell-off in tech stocks, wiping over $1 trillion from the Nasdaq Composite Index. NVIDIA suffered the worst single-day loss in U.S. history, plunging by $600 billion, while Alphabet and Microsoft also took major hits. The crypto market also reacted, with Bitcoin briefly dipping below $100,000 and total liquidations soaring by more than 850% on Jan. 27, wiping out nearly $1 billion in leveraged positions.

The investigation into DeepSeek is part of a broader effort by the U.S. government to maintain its economic and geopolitical power in the face of growing competition from China and other countries. The U.S. is particularly concerned about the potential for China to use its technological advancements to gain an advantage in the global economy.

The outcome of the investigation will likely have significant implications for the global AI market and the balance of economic power between the U.S. and China. As the investigation continues, the world watches closely to see how the U.S. government will respond to the challenge posed by DeepSeek and other Chinese AI companies.