A Late Entrant Making Early Waves
Deepseek, China’s Open AI competitor, is making waves in the tech space as it rivals ChatGPT and OpenAI. Deepseek began operations in 2023, eight years after OpenAI was founded in 2015 and three years after the launch of ChatGPT in 2020. The founder of Deepseek, Lian Wenfeng, incorporated innovativeness in developing Deepseek AI due to his experience in the financial markets. He previously co-founded Hangzhou Yakebi Investment Management and Highfyer-AI, which focused on providing machine learning models for stock trading.

Cost-Efficiency as a Key Competitive Advantage
Deepseek has gained attention in the tech space due to its cost efficiency in development compared to ChatGPT and OpenAI. It is estimated that the cost of developing Deepseek AI V3 was about $5.6 million, a fraction of the cost incurred by OpenAI, which reportedly spends an estimated $700,000 daily.

This lower cost is attributed to reinforcement training techniques such as Q-Learning, Deep Q-Networks (DQN), Policy Gradient, Monte Carlo Method, Temporal Difference (TD) Learning, and the Actor-Critic Method. Deepseek also relied on cheaper chips instead of the expensive Nvidia chips used by ChatGPT and OpenAI, making it more scalable and cost-effective.

Open-Source Strategy and Development Model
Unlike its Western counterparts, Deepseek used developers and researchers to improve its model through open-source collaboration and integration of existing technologies rather than creating new systems from scratch. Hangzhou Deepseek Artificial Intelligence Basic Technology Research Co. Ltd., the company behind Deepseek, has made Deepseek AI open source to the public, removing restrictions and enhancing accessibility. This open model has made Deepseek more user-friendly than ChatGPT and OpenAI, which maintain tighter usage controls.

Public Adoption and Global Receptiveness
Deepseek received significant attention for its ability to solve tasks with speed and logical precision. Its release quickly made it one of the most downloaded applications globally, highlighting both the rising global dominance of China in emerging technologies and the increasing public openness to Chinese innovations.

Geopolitical Reactions and Market Impacts
However, Deepseek's rise has not gone unnoticed in the United States. Former U.S. President Donald Trump voiced concerns over the need for American tech firms like Nvidia to innovate faster to avoid being overtaken by Chinese competitors. The tech rivalry adds fuel to the ongoing economic tug-of-war between China and the U.S., with expectations of increased tariffs on Chinese technology products.

The entry of Deepseek into the market has already shaken investor confidence. U.S. tech stocks, particularly Nvidia, have seen significant drops — levels not experienced since the COVID-19 pandemic — as uncertainties around Deepseek’s impact loom.

Legal Scrutiny and Ethical Challenges
OpenAI has raised intellectual property concerns, accusing Deepseek of using its proprietary technology in the development of its models. Meanwhile, Deepseek, like other AI systems, faces challenges such as user privacy, accuracy, and the ethical implications of unrestricted usage. The lack of constraints could make Deepseek vulnerable to misuse, prompting calls from international AI stakeholders for the Chinese government to impose safeguards and restrictions.

Broader Implications for Global AI Competition
The arrival of Deepseek marks a new chapter in global AI competition. The growing number of AI entrants is prompting calls for international regulations. Other major Chinese players are joining the race: Alibaba has already launched its AI model, and ByteDance (TikTok’s parent company) is expected to release a system that reportedly outperforms Microsoft’s AI.

Towards a More Equitable AI Ecosystem
In the consumer space, users will have access to a diverse range of AI platforms tailored to different needs. The entry of affordable and accessible models like Deepseek may lead to broader, more equitable use of AI technologies worldwide. This shift could pave the way for full-scale global adoption of artificial intelligence across sectors.