By Dennis Kneale
Is DeepSeek just one big Deep Fake? It may turn out to be the Milli Vanilli of Artificial Intelligence. The dreadlocked duo won the Grammy for Best New Artist in 1990, after which was discovered they had lip-synched songs sung by someone else.
It is a great story: a hot new AI chatbot debuts from an unknown outfit in China that spent only $6 million to be able to outmuscle U.S. leader ChatGPT from OpenAI, which had to raise almost $18 billion to make its advances.
This stunning revelation chopped a trillion dollars off the value of top tech stocks in a day. If DeepSeek can do AI with only a fraction of the chips now required, then chip stocks, and AI-boosted software stocks, and even energy stocks all suddenly must be a “sell.”
Boom. Nvidia fell almost 20% on Monday as the news spread. I failed to seize the opportunity and buy it at $118. The stock market is said to run by Bulls and Bears, but really it is a bunch of Gazelles—they run like crazy at the first rustle in the tall grass.
This DeepSeek fearmongering channels the old Sputnik threat from that other Communist boogeyman, Russia. It launched the U.S. space program, and now this is being applied to AI—the Next Next Big Huge Thing.
DeepSeek may even be a spybot for the Communist government. Once downloaded to your phone, it is entitled to collect email addresses, “text or audio input, prompts, uploaded files, feedback, chat history, or other content,” IP addresses, device identifiers, and cookies. All of this according the app’s terms of service.
Gee, why so much peeking for a simple AI engine?
The thought is a big stretch—that some fledgling in China with less than ten million dollars can suddenly engineer a better way than OpenAI, one of the most advanced AI shops on the planet. China is, for all its power, one of the least innovative nations in the world. Its advances rely mostly on stealing American technology, and demanding access to it in exchange for being U.S. firms’ being able to sell in China.
Plus, it turns out the guy behind DeepSeek is a hedge fund manager—and hedge funds are infamous for messing with the markets. His name is Liang Wenfeng, age 40. He met on January 20th with the Chinese premier, the third-highest official in the Communist government.
OpenAI is investigating whether DeepSeek latched on to it and made it its own. David Sacks, President Trump’s new AI czar, addressed this on Fox News, saying an AI technique called “distillation” has a student AI model ask the parent model millions of questions, “and they can essentially mimic the reasoning process that they learn from the parent model, and they kind of suck the knowledge out of the parent model.”
He added: “And there’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of open AI’s models. And I don’t think open AI is very happy about this.”
Likewise, Palantir co-founder Joe Lonsdale told Maria Bartiromo on Fox Business: “This is like 40 years of history. … These CCP are very bad guys. They probably stole our chips to train some of these things. But they also do something smart on top of it. This is China. We’ve got to be wary the fact that we’re letting them, not just like TikTok, but letting this company as well as others be at the top of our app stores, take all of our data into China? I think that’s ridiculous.”
So let us quell the panic over DeepSeek, while also doing something about it: make it all but impossible for China-based interlopers to insinuate themselves inside U.S. platforms and surf on top of American innovation. Now, that would be a first.
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Dennis Kneale is host of the podcast “What’s Bugging Me” on Ricochet and author of the new book “The Leadership Genius of Elon Musk,” published Jan. 28, 2025 by HarperCollins.