Deepseek: China's AI revolution under the shadow of surveillance-severe allegations from Washington

Geopolitical tensions caused by AI: Why DeepSeek's R1 model is dividing the world

The headlines of the past few months have been dominated by a Chinese company that has fundamentally changed the global AI landscape. DeepSeek, a relatively young startup from Hangzhou, has not only captured the attention of the tech world with its groundbreaking AI model R1, but has also sparked fierce controversies about data privacy, espionage, and geopolitical tensions.

A startup is changing the rules of the game

DeepSeek was founded in 2023 by Liang Wenfeng, a 40-year-old hedge fund manager with no traditional technology background. Wenfeng, who originally came from the field of quantitative finance, had already launched the hedge fund High-Flyer in 2015 together with two fellow students from Zhejiang University. This fund, which specialized in mathematical models and artificial intelligence for investment strategies, quickly became one of China's leading quantitative hedge funds with over $13 billion in assets under management.

What sets DeepSeek apart from other AI companies is its unusual funding structure. The company is financed exclusively by High-Flyer and is therefore independent of external investors. This independence enabled Wenfeng to acquire thousands of Nvidia processors and launch an ambitious AI project as early as 2021 – long before the US export restrictions on AI chips to China.

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Technological breakthroughs at a fraction of the cost

January 2025 marked a turning point in the global AI industry when DeepSeek unveiled its R1 model. Within days, the DeepSeek app climbed to the top of the app stores, even pushing OpenAI's ChatGPT into second place. The financial markets reacted dramatically: Nvidia shares plummeted 17 percent of their value in a single day, representing a historic loss of $589 billion.

The DeepSeek R1 model impresses with its technical specifications and performance capabilities. With a total of 671 billion parameters, it activates only 37 billion parameters per pass, made possible by an innovative mixture-of-experts architecture. This efficiency is reflected in the cost: DeepSeek claims to have spent only $5.6 million training its model—a fraction of the estimated $100 million OpenAI invested in GPT-4.

The model's performance is impressive. In the AIME 2024 benchmark, DeepSeek-R1 achieves an accuracy of 79.8 percent, and even 97.3 percent for mathematical tasks (MATH-500). Particularly noteworthy is the system's ability to "simulate thinking," an approach in which the AI ​​articulates its thought processes and solves complex problems step by step.

Open Source as a competitive advantage

A crucial factor in DeepSeek's success is the decision to release the R1 model under an MIT open-source license. This license allows anyone to use, modify, and even commercially exploit the model free of charge. While the model itself is subject to a specific DeepSeek license that includes certain usage restrictions, the source code remains completely open.

This openness stands in stark contrast to the proprietary approaches of Google, OpenAI, and other Western AI companies. Users can download the complete model or smaller versions directly and run them on their own servers or even local machines. This flexibility, combined with the drastically lower usage costs—DeepSeek charges only 14 US cents per million tokens, while OpenAI charges $7.50—fundamentally challenges existing business models.

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Serious allegations from Washington

DeepSeek's success story, however, has a dark side that has increasingly come into focus in recent months. A senior US State Department official has made serious allegations against the Chinese company to Reuters. These allegations cover several critical areas and raise fundamental questions about the security and privacy of DeepSeek users.

The central allegation is that DeepSeek “knowingly provided and likely will continue to provide support for China’s military and intelligence operations.” This support goes far beyond mere open-source access to its AI models and includes the active sharing of user data and statistics with Beijing’s surveillance apparatus.

Particularly explosive is the claim that DeepSeek is mentioned in over 150 procurement documents from the Chinese People's Liberation Army and other military-affiliated organizations. This suggests that the company is not merely passively forwarding data, but actively providing technological services to the Chinese military.

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Millions of user data points in focus

The privacy concerns are particularly serious when considering DeepSeek's reach. The company boasts over 47 million daily users worldwide. According to US lawmakers, DeepSeek transmits data from American users to China via a "backend infrastructure" connected to China Mobile, a state-owned telecommunications giant.

While Chinese companies are legally obligated to provide data to the government upon request, the accusation against DeepSeek goes further. The company is alleged to be proactively sharing this information with Chinese authorities, raising significant privacy concerns for millions of users worldwide.

Circumvention of US sanctions through shell companies

Another serious allegation concerns the alleged circumvention of US export restrictions. DeepSeek is said to have attempted to gain access to Nvidia's high-performance H100 chips, which have been subject to US export restrictions since 2022, through shell companies in Southeast Asia. Washington fears that China could use this technology for military purposes or to gain an advantage in the AI ​​race.

“DeepSeek has attempted to use shell companies in Southeast Asia to circumvent export controls, and DeepSeek is attempting to access data centers in Southeast Asia to remotely access US chips,” the US official stated. These allegations raise questions about the true cost and efficiency of DeepSeek’s models, as access to high-performance chips could significantly impact training costs.

Nvidia has partially denied that DeepSeek uses H100 chips, stating that the company only uses the less powerful H800 chips, which are approved for export to China. However, Reuters and other media outlets have not been able to independently verify this information.

The context of the global surveillance apparatus

The allegations against DeepSeek must be viewed in the context of global intelligence activities. China has significantly expanded its surveillance capabilities in recent years. The National Intelligence Law, passed in 2017, grants Chinese security agencies extensive powers to compel individuals, companies, and organizations at home and abroad to cooperate with intelligence services. The Anti-Espionage Law, revised in 2023, considerably broadened the definition of espionage and created a more stringent instrument for control and surveillance.

At the same time, it is important to note that Western intelligence agencies also operate extensive surveillance programs. The NSA programs revealed by Edward Snowden, such as PRISM and the British Tempora program, demonstrate that mass surveillance of internet and telephone communications is by no means a purely Chinese phenomenon. The NSA has access to large portions of internet traffic passing through American territory and processes these vast amounts of data in its own systems. The British GCHQ, through the Tempora program, can access 40 billion individual pieces of data per day.

Mutual manipulation and disinformation

The allegations against DeepSeek should also be viewed against the backdrop of the intense geopolitical rivalry between the US and China. Intelligence agencies of different nations have a long history of mutual manipulation and disinformation. The US has repeatedly attempted to limit China's progress in AI technology, while China, for its part, is striving to achieve technological independence.

The fact that relevant evidence for the allegations against DeepSeek is not publicly available should prompt a cautious assessment of the situation. It could just as easily be slander by a direct state competitor, as the original text already suggested. The threat of cyberattacks and disinformation campaigns aimed at undermining trust in competing technologies is real and well-documented.

Technological sovereignty and innovation

DeepSeek's rise must also be understood in the context of China's pursuit of technological sovereignty. US export restrictions on semiconductor chips were intended to curb China's AI development, but may have had the opposite effect, fostering innovation through limitations. Brian Colello, a tech analyst at Morningstar, commented: "These Chinese models were processor-limited, which led to some creative training techniques, and the DeepSeek model has shown above-expected performance given the processors it was trained on.".

DeepSeek's efficiency demonstrates that technological breakthroughs don't always depend on the largest investments or the latest hardware. The company has proven that innovative approaches like its mixture-of-experts architecture and advanced training methods can lead to impressive results, even with less powerful hardware.

The future of AI development

DeepSeek's success has fundamentally changed the AI ​​industry and raised important questions about the future of technological development. The combination of an open-source approach, drastically reduced costs, and comparable performance challenges the business models of established companies. At the same time, data privacy and security concerns highlight the challenges associated with the increasing globalization of AI technologies.

The company is now considering external financing to manage its rapid growth. Potential investors such as the Alibaba Group and Chinese state-owned funds have already signaled interest, which, however, could exacerbate Washington's concerns and limit future business opportunities in the US.

Data protection in the digital age

The DeepSeek controversy highlights the complex challenges of data protection in the digital age. While China has had a comprehensive data protection law, the Personal Information Protection Law (PIPL), since 2021, which adopts principles from the European GDPR, government agencies remain largely exempt from these regulations. This creates a tension between private sector data protection and state security interests.

The challenge lies in the fact that users worldwide want to benefit from the technological advantages of innovative AI systems, while simultaneously ensuring their privacy and data security. DeepSeek's free service and superior performance make it attractive to millions of users, but concerns about data sharing with Chinese authorities are justified and should be taken seriously.

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Innovation between progress and risk

DeepSeek represents both the enormous opportunities and the significant risks of modern AI development. The company has demonstrated that technological innovation is not limited to specific countries or companies and that creative approaches can lead to groundbreaking results. Its open-source philosophy and drastic cost reduction have the potential to democratize AI technologies and make them accessible to a wider user base.

At the same time, the DeepSeek case highlights the need for a nuanced view of technology companies from different countries. While the allegations made by the US government must be taken seriously, they should also be considered within the context of global intelligence activities and geopolitical rivalries. The fact that Western intelligence agencies also operate extensive surveillance programs should lead to a balanced discussion about data protection and privacy, one that is not dominated by national interests.

The future of AI development will depend significantly on how well the international community succeeds in creating a framework that fosters innovation while simultaneously protecting the rights and security of users. DeepSeek has made an important contribution to this discussion by highlighting the opportunities and limitations of current AI technology. The challenge now is to use these insights to establish responsible and ethical standards for the further development of artificial intelligence.

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