[Econ & Biz] DeepSeek's impact on AI market: what is it and what does it mean?

Chinese AI start-up DeepSeek is making waves with what it says is a cost-efficient model.

But with alleged data privacy risks, it has prompted global scrutiny, market upheaval, and government crackdowns.

Our business correspondent Moon Hye-ryeon joins us in the studio with this topic.

Hye-ryeon, can you explain the controversies surrounding DeepSeek?

As you said, Jung-min, DeepSeek is currently under global scrutiny after claiming its new "R1" model can rival existing AI models in the market such as ChatGPT at just a fraction of the cost.

With this news, its AI chatbot topped ChatGPT in app store downloads as users began to try this new model for themselves to test the claim.

But as more and more users gathered, concerns over excessive data collection such as keyboard stroke patterns that could be used to identify specific users, have sparked privacy fears.

"Collecting keystroke patterns to identify individuals doesn't necessarily mean a better service, so that's why it seems a bit excessive."

And another issue with DeepSeek's data collection is that users can't opt out of having their data collected, unlike ChatGPT.

Along with these fears regarding user data is speculation of third-party access, as the information is stored in servers in China something that South Korea's National Intelligence Service confirmed on Sunday, as it cited that Chinese advertisers are being given unlimited access to DeepSeek's user data.

Reports of content censorship also raised questions about DeepSeek's AI chatbot failing to produce accurate information due to heavy reliance on China's official stance on certain subjects.

With these controversies, how have investors and industry insiders been responding?

With doubts surrounding DeepSeek's development process, Microsoft and OpenAI launched a probe into suspected data exfiltration by individuals that could be linked to the Chinese firm.

Companies in non-AI-related sectors, such as those in South Korea, responded to data privacy concerns by restricting employee access to DeepSeek on work computers.

However, global investors indicated their anticipation for DeepSeek by wiping billions of dollars off Nvidia's market value – resulting in the biggest market cap loss ever for a U.S. company.

There are mixed views from experts and industry insiders on these reactions regarding whether this attention is warranted, with some saying that DeepSeek had the second-mover advantage.

"When you have an amazing solution coming from OpenAI, you know that it can be done. Then the question changes a little bit – shifts towards, "How can we do that in a more efficient way."

And with the current competition between the U.S. and China, how are global leaders and governments responding to this AI race?

South Korea, Australia, and Japan's government ministries moved to also block DeepSeek access on computers connected to external networks, while Italy has blocked the app from app stores altogether, citing user data privacy.

But some are saying that the reason why DeepSeek even came about in the first place is because of such restrictive regulations.

Here's what an expert said.

"I think that it symbolizes that the AI competition will be severe, and although one country will like to restrict the AI development of the other country, they will AI will always find innovative ways of how to develop."

But global leaders and firms gathered in Paris amid calls for universal AI regulation where 60 countries signed a statement listing priorities such as transparency, safety, and sustainability for future AI development.

The U.S. and the UK, however, refused to sign the statement.

"The United States of America is the leader in AI, and our administration plans to keep it that way."

U.S. Vice President Vance shared the view that too many regulations can "kill" a developing industry such as AI as it takes off and stated the Trump administration's plans to take full "advantage" of its position in the market.

The U.S. recently billed "The Stargate Project" which aims to build AI infrastructure in the U.S. worth 500 billion U.S. dollars.

As the AI race between Washington and Beijing heightens and countries seek to establish regulations to keep them in check in an increasingly complex technological landscape, eyes are on how the balance of innovation with security will play out.

Thank you for the wrap-up, Hye-ryeon.

Thank you for having me.