A new player has very much entered the artificial intelligence (AI) villa, and it’s already causing some significant disruption. 

DeepSeek, a Chinese AI startup, made waves last week when it released the full version of R1, the company’s open-source reasoning model that can outperform OpenAI’s o1. On Monday, downloads of DeepSeek’s AI assistant topped ChatGPT in the App Store, which had previously been the most downloaded free app. DeepSeek has also already climbed to the third spot overall on HuggingFace’s Chatbot Arena, under several Gemini models as well as ChatGPT-4o. 

Also: DeepSeek’s new open-source AI model can outperform o1 for a fraction of the cost

But almost as soon as it dethroned OpenAI, DeepSeek began limiting signups due to a cyberattack. ZDNET is currently testing DeepSeek, as we do all other popular AI chatbots, to see how it shapes up, pending signup limitations.  

What is DeepSeek?

Founded in May 2023 by Liang Wenfeng (and thus not even two years old), the Chinese startup has challenged established AI companies with its open-source approach. According to Forbes, DeepSeek’s edge may lie in the fact that it is funded only by High-Flyer, a hedge fund also run by Wenfeng, which gives the company a funding model that supports fast growth and research. 

What is DeepSeek R1?

Released in full last week, R1 is DeepSeek’s flagship reasoning model, which performs at or above OpenAI’s lauded o1 model on several math, coding, and reasoning benchmarks. What makes R1 most interesting is that, unlike other top models from tech giants, it’s open-source, meaning anyone can download and use it. 

The model also cost significantly less to train than comparable options and is therefore cheaper to access. For reference, R1 API access starts at $0.14 for a million tokens, which is a a fraction of the $7.50 OpenAI charges for the equivalent tier. 

One drawback that could impact its long-term competition with o1 and other American-made models is censorship. Chinese models often include blocks on certain subject matter, meaning that while they function comparably to other models, they may not answer some queries. In December, ZDNET’s Tiernan Ray compared R1-Lite’s ability to explain its chain of thought to that of o1, and the results were mixed. 

Also: Enterprises are hitting a ‘speed limit’ in deploying Gen AI – here’s why

Of course, all popular models come with their own red-teaming background, community guidelines, and content guardrails — but at least at this stage, American-made chatbots are unlikely to refrain from answering queries about historical events. 

Privacy concerns

Data privacy worries that have circulated around TikTok — the Chinese-owned social media app that is now somewhat banned in the US, ostensibly for that reason — are also cropping up about DeepSeek. It’s unclear what user data the company may be collecting or potentially sharing with the Chinese government (claims made by the US government that TikTok owner ByteDance has repeatedly denied). 

“The personal information we collect from you may be stored on a server located outside of the country where you live,” DeepSeek’s privacy policy reads. “We store the information we collect in secure servers located in the People’s Republic of China.”

Also: ‘Humanity’s Last Exam’ benchmark is stumping top AI models – can you do any better?

The policy continues that “Where we transfer any personal information out of the country where you live, including for one or more of the purposes as set out in this Policy, we will do so in accordance with the requirements of applicable data protection laws.”

However, some believe the fact that R1 is open-source means increased transparency, giving users the opportunity to inspect the model’s source code for signs of privacy-related activity. Regardless, DeepSeek also released smaller versions of R1, which can be downloaded and run locally to avoid any concerns about data being sent back to the company (a. opposed to accessing the chatbot online). All chatbots, including ChatGPT, are collecting some degree of user data when queried via the browser. 

What this means for AI at large 

R1’s success highlights sea change in AI that could empower smaller labs and researchers to create competitive models and diversify the field of available options. For example, organizations without the funding or staff of OpenAI can download R1 and fine-tune it to compete with models like o1. Just before R1’s release, researchers at UC Berkeley created an open-source model that is on par with o1-preview, an early version of o1, in just 19 hours and for roughly $450. 

Given how exhorbitant AI investment has become, many are speculating that this development could burst the AI bubble. Multiple reports indicate the stock market is already panicking. 

Also: $450 and 19 hours is all it takes to rival OpenAI’s o1-preview

DeepSeek’s ascent comes at a critical time for Chinese-American tech relations, just days after the long-fought TikTok ban went into (at least partial?) effect.