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DeepSeek: A Groundbreaking AI Model or a National Security Risk?
In the ever-evolving world of AI, the recent release of DeepSeek, an advanced model developed by a Chinese AI company, has created waves and ignited discussions on the global stage. As business leaders navigate this dynamic terrain, understanding the multifaceted impact of DeepSeek is crucial.
DeepSeek’s Rapid Rise to Prominence
DeepSeek made an impressive entry into the AI landscape, attracting attention with its state-of-the-art capabilities and significant cost efficiencies. The model quickly became the talk of the technology world, benchmarking competitively against existing models and offering a seemingly attractive proposition for businesses looking to integrate AI. It soared to become one of the most downloaded applications in a matter of days, capturing the zeitgeist with its promise of affordability and performance.
The Transparency and Open Source Debate
A critical point of contention with DeepSeek lies in its transparency. While initially touted as an open-source model, further investigation revealed discrepancies. For a model to be truly open-source, it must meet the Open Source Initiative's criteria, which include unrestricted usage and disclosure of full training datasets—requirements DeepSeek fails to meet. This brings into question the transparency and reliability of such models for enterprise use.
The Hidden Costs and Implications
The training cost of DeepSeek’s r1 model, initially reported as a remarkably low $5.5 million, has been called into question by industry experts. Analysts indicated that this figure only accounted for the final training run, not the complete development expenses, which could be significantly higher. This adds an additional layer of complexity for business leaders who must consider the hidden technological and financial costs when deploying AI models.
Navigating Data Privacy and Security Concerns
Perhaps the most significant discussion point is the data privacy implications tied to DeepSeek’s Chinese origin. Data processed through the model faces privacy risks, as it can potentially be accessed by the Chinese government under local laws. This raises substantial concerns for businesses about where their data could end up and how it might be used, making it essential to assess the risk of using such models in business operations critically.
Legislative and Regulatory Backlash
In response to these emerging concerns, there has been a growing push for legislation in the United States to regulate the use of DeepSeek and similar AI technologies. Lawmakers have proposed stringent measures, including hefty fines for enterprises and individuals using unauthorized AI tools, underscoring the perceived threat to national security and economic stability.
Strategizing Future AI Integration
For decision-makers, the situation with DeepSeek serves as a pivotal case study in the broader AI landscape. It is a stark reminder of the need for due diligence, strategic planning, and understanding the geopolitical dimensions of AI adoption. As industries continue to digitize and evolve, the balance between leveraging cutting-edge technology and safeguarding company and customer data will remain a top priority.
Conclusion
The introduction and subsequent controversy of DeepSeek underscore the intricate web of opportunities and challenges in the AI industry. Business leaders are tasked with making informed decisions that consider technological advancements, cost implications, and regulatory compliance to harness AI’s full potential. As the dialogue continues to evolve, staying informed and proactive in strategy implementation will be key to navigating this rapidly changing domain.
Topics Covered in This Episode
1. Popularity of DeepSeek
2. DeepSeek’s capabilities and benchmarks
3. DeepSeek causing market disruptions
4. Global Reactions and Controversies
5. Analysis and Criticism of DeepSeek
Podcast Transcript
Jordan Wilson [00:00:17]:
Generative AI is already a black box that's kind of mysterious. So should you be using DeepSeek, A pretty state of the art and impressive model, but, one from a Chinese AI company that has maybe more questions than answers. Sure. It has impressive benchmarks, low cost, and is kind of, but not really open source. Yet a bill was recently introduced in the US Senate that would levy $100,000,000 fines for companies and $1,000,000 fines for individuals just for using it and could even carry potential prison sentences for willful violations. So, sure, DeepSeek is popular. It's trending. Everyone's using it.
Jordan Wilson [00:01:11]:
Everyone's talking about it. And big companies like Microsoft Perplexity and AWS now have supported versions of their popular v three and r one models. So is this a Sputnik moment for AI, or is DeepSeek a potential national security threat? We're about to dive in pretty deep today on DeepSeek, answer those questions, and hopefully, a lot more. What's going on y'all? My name is Jordan Wilson, and welcome to Everyday AI. This is your daily livestream podcast and free daily newsletter helping everyday people like you and me not just learn what's going on in the world of AI, but how we can all actually leverage that and take it to our advantage, grow our companies and careers. And I want you to be the smartest person in your company when it comes to AI and where you can do that aside from listening to this podcast every single weekday when we do it. If you wanna come jump on the live stream and ask questions, we do that at 07:30AM Central Standard Time. But the other place you do it is on our website at youreverydayai.com.
Jordan Wilson [00:02:19]:
So if you want more on today's episode, we're gonna be recapping today's episode in our newsletter as we do every single day as well as sharing everything else that you need to be the smartest person in AI at your company. So please make sure you go check that out. While you're there, I'm not gonna stop promoting this y'all. Go listen to episodes four forty three through four forty seven, on our website. It's all for free. It's all there. Listen to it at your leisure. Listen to it on two x.
Jordan Wilson [00:02:46]:
I won't be mad. Right? But go check out those episodes, our twenty twenty five AI predictions and roadmap series. Because guess what? Before any of this deep seek hoopla happened, I told you exactly how this was gonna go down. I told you exactly how a lot of Chinese LLMs in 2025 were gonna be a little more Trojan horse than actual state of the art models. So, not saying I warned y'all and told you what was gonna happen, but, you know, go go listen to those shows. Alright. So before we get into deep sea can talk about if this is AI Sputnik moment or if it is a national, security disaster. Let's first go over the AI news as we do every single day.
Jordan Wilson [00:03:32]:
Alright. So o3, the o3 model from OpenAI has achieved gold medal status at the twenty twenty four International Olympiad in informatics. So OpenAI's new reasoning model o3 has achieved gold medal status at the twenty twenty four international Olympiad in informatics, marking a significant achievement in algal algorithmic, problem solving and coding. This accomplish is notable as o3 reached this level without relying on competition specific handcrafted strategies highlighting its advanced reasoning capabilities. So o3's performance was driven solely by scaled up reinforcement learning, setting it apart from its predecessor, o one, which use tailored strategies specifically for that competition. So the model's code forces rating now ranks in the ninety ninth percentile worldwide, aligning it with the top human competitors on the on the planet. That's a considerable improvement from o one's ninety third percentile, and that is the o one version, the IOI version that was fine tuned specifically, for the International Olympiad in informatics. Alright.
Jordan Wilson [00:04:47]:
Our next piece of AI news, Apple is reportedly partnering with Alibaba to enhance AI features for iPhone users in China. So, according to the information, Apple is collaborating with Alibaba to introduce new AI features for iPhone users in China. The partnership aims to address Apple's declining market share in China where domestic competitors like Huai have surged ahead with AI integrated smartphones. So, yeah, Apple couldn't roll out their Apple intelligence in China, so now they have been looking for an AI partner. So initially, Apple had partnered with Baidu for AI development, but the results did not meet Apple's standards. Other potential partners according to the information considered by Apple included Tencent, ByteDance, and DeepSeek, though DeepSeek was ultimately not chosen due to its insufficient resources and experience. The AI features developed by Apple and Alibaba are currently awaiting approval from China's cyberspace regulator. Alright.
Jordan Wilson [00:05:47]:
And that integration of AI tools is pretty crucial for Apple, especially after, a dip in iPhone sales during the holiday quarter, which is traditionally a peak sales period. Alright. Last but not least, OpenAI has reportedly not received Elon Musk's takeover bid, for OpenAI. Yeah. This is apparently more than just a Twitter spat. So OpenAI, according to Reuters, plans to eject, reject, not eject out of a rocket, but reject, Elon Musk's, led, group bid to buy OpenAI for $97,400,000,000. So the bid was reportedly sent to OpenAI's outside counsel, but has not yet been formally received by the board, leading to confusion and tension between the parties. So Elon Musk's lawyer claimed the offer was sent as a detailed four page letter of intent to purchase OpenAI's assets, but OpenAI CEO Sam Altman dismissed the offer as a disruptive tactic.
Jordan Wilson [00:06:54]:
So OpenAI, which was cofounded by Musk in 2015 along with Sam, Sam Altman and others, is in the process of transitioning from a nonprofit to a for profit entity to raise $40,000,000,000 in new funding for AI model development. So Altman emphasized that OpenAI is not for sale and criticized Musk's attempt as a move to interfere with the company's plans to transition from a nonprofit to a for profit entity. Legal experts suggest Musk's bid complicates the valuation of OpenAI's nonprofit assets, highlighting the need for regulatory oversight to ensure fair market value. Yeah. I don't know. Guess who's in, regulatory oversight right now in the US government? That would be Elon Musk. So that's gonna be an interesting one to see how it plays out. Alright.
Jordan Wilson [00:07:41]:
Enough chitchat y'all. Let's talk deep seek. Livestream audience, love to see y'all joining me. Thank you for tuning in. Big bogey face from, YouTube, Douglas, Yoshell, Zofia, Sandra, everyone else. Marie, Bryant, thank you for tuning in. I'm curious. Are you all using DeepSeek? Right? Samuel here says, I downloaded the DeepSeek app and played with it, but I use it a lot in perplexity.
Jordan Wilson [00:08:09]:
Yeah. I'm curious. Is DeepSeek in your company's radar right now? Is your company using DeepSeek? Are you using it as an individual? You you know, I wanna hear from you all, because maybe I have a a tainted point of view, but we'll we'll get to that here. But let's let's just go over. Let's go over the good stuff, y'all. We're gonna go over the good stuff, the bad stuff, the questionable stuff, because let's be honest, since this model launched, it has been grabbing headlines for good and bad reasons. Yet I still think even after it's been nearly three weeks since its release, I still think there are way more questions than answers, which is not normal for a state of the art large language model. So here is the real good stuff about DeepSeek.
Jordan Wilson [00:09:06]:
So they have very capable models that bench well. So they're, they have their faster, DeepSeek v three, which is their kind of transformer, type model, and then they have their powerful r one reasoning model. Right? So, again, we have to start separating these models as the big companies like OpenAI, Google, and now DeepSeek, are all kind of onboard with the same thing. You have your kind of, quote, unquote, traditional transformer models, then you have your reasoner models and, you know, great benchmarks from deep seek. When they came out, you know, you can make the argument that it was a top, maybe two or three, model in the world, probably both of them. You could have made that argument. Also, this is great for the open source community and AI development as a whole. I'm gonna get to that whole open source thing.
Jordan Wilson [00:09:56]:
I said it's great for the open source community. Alright? The other thing, because we're gonna talk about a lot of the problematic or unknown things when it comes to deep seek, but the good thing is now there are US hosted alternatives. Right? So, yes, this was launched by the Chinese AI company DeepSeek, which is a relatively unknown company. Right? Especially, you know, here in The US and other parts of the world. So there's been a lot of, a lot of questions on like, hey. Should we be using it? Well, there are now US hosted alternatives via companies like Perplexity, Microsoft, AWS. So, in the last couple of weeks, it's gotten this boost of legitimacy, as some of the biggest tech companies here in The US have offered official support, for DeepSeek's models. And in these, kind of updated versions, user data is processed and stored on servers in The US or other secure regions.
Jordan Wilson [00:10:54]:
Right? That's important. And they use a modified DeepSeek model, removing some of the more problematic features like censorship censorship or data sharing mechanisms. Alright. So, alright. Samuel is saying, our company leadership discussed DeepSeek yesterday. It's, quote, unquote, easy relatively to host and fine tune. It is, but it's way more problematic than that because we have to talk about the real not so good stuff. Alright? One of the reasons DeepSeek literally caused market mayhem here in The US was because of a couple of things.
Jordan Wilson [00:11:40]:
One, they were they reported that the model cost $5,500,000 to train. And they said the model is fully open source. Those two things are not true. Alright? So two. So I would say it was actually the three things that that happened all at once. Number one, it had great benchmarks. That can't be denied. Right? So when you come out with a new model that is benching as, you know, a top three model in the world, going from a relatively unknown to competing or overthrowing on certain benchmarks state of the art models from Google and OpenAI.
Jordan Wilson [00:12:19]:
That's point number one. Very powerful, capable models. The fact that it's like, oh, this is open source. Not necessarily the truth. And the fact that it's 5.5. They said it was $5,500,000 to train. Not necessarily true. We're gonna talk about that.
Jordan Wilson [00:12:34]:
Alright. So it was kind of the culmination of those three things happening all at once that literally shook The US economy. We saw a roughly here in The US. It was temporary. And, for the most part, all of those companies, have mostly recovered, their market cap that maybe they lost. But, essentially, when this happened, a lot of the big US tech stocks, specifically, NVIDIA went down because everyone started saying like, oh, apparently, this deep sea company only spent $5,000,000, to train this state of the art model. Reportedly, they didn't have access or they they reportedly said they didn't have access to the most powerful NVIDIA GPU. So they're like, the rest of the world who didn't care to really investigate or or read or take their time, for, you know, third party and independent analysis to come out, they essentially said, wait.
Jordan Wilson [00:13:25]:
The world doesn't need, you you know, trillions of dollars worth of NVIDIA GPUs. Right? It's not the case. Alright? So let's talk about some of the other things in deep sync that weren't that good. Alright. So it's not truly open source, period. I'm gonna I'm gonna go through and break down the fact that this is not an open source model. Just like sorry y'all. Like, Meta, not technically open source.
Jordan Wilson [00:13:50]:
I'm a big fan of Meta. I talk with, a lot of their their staff. It's not technically open source. Neither is DeepSeek, and it's not even close. Right? So we should probably stop calling it open source and call it an open, open weights, open ask, whatever you wanna call it. It's not an open source model. Alright. Also, there's no real data opt out.
Jordan Wilson [00:14:12]:
Alright. Unless you are downloading and fine tuning the model yourself, there's no real out, there's no real data opt out. If you are using the service, just by default, their API, using it on their website, downloading the mobile app, which by the way, skyrocketed to the number one most downloaded app, free app. Right? If you're using it that way, there's no such thing as a data opt out. Y'all, I kid you not. I saved their old terms of service and data privates, in terms of service and privacy policy. And then when they updated it, I compared it line by line like a human. That's why I look tired.
Jordan Wilson [00:14:49]:
Right? I don't sleep a lot. It might actually be Tuesday in my body if I'm coming with some hot takes. Alright. So the data that you upload, unless you have downloaded this and fine tune it yourself or unless you are using, the AWS version, the, perplexity version, the Microsoft Azure version, if you are using deep seek, right, strictly out of the box, everything you upload, literally, everything you upload gets sent straight to DeepSeek. You cannot opt out. Unlike US companies that offer some data protection, there's zero. As soon as you enter anything, DeepSeek essentially owns your data. There's nothing you can do about it.
Jordan Wilson [00:15:34]:
If you accidentally upload proprietary documents that maybe you didn't mean to or maybe you didn't mean to, it's not yours anymore. It's China's. And guess what? The Chinese government can access that if they want to. Right? I'm not saying everything you send automatically gets sent over to the Chinese government, but the Chinese government can access any of that data if it wants to. Alright? It's also an extremely censored model. Although, like we said, the the versions, from Microsoft perplexity, AWS are not as censored, but try you know, this has been well documented. Try asking the deep seek out of the box about any human rights violations in China. They won't answer you.
Jordan Wilson [00:16:16]:
Right? It is already banned in multiple countries and key markets. Let's talk about this new law. Alright? There's a new law. US firms, if this law were enacted, US firms could face up to a hundred million dollar fines for using the model. Individuals could face a million dollar fines just for using the model. Alright? And even prison sentences for willful violations. Also, I, like, I have to be real. That actual bill that was proposed, by a US Senator stands like an icicle's chance on the equator of making it anywhere.
Jordan Wilson [00:17:02]:
Right? It's it's not going to become a law, but there's going to be follow-up versions of actual laws here in The US that are I think that will be way harsher than, you you know, the TikTok ban that actually stood in effect for, like, twenty four hours. There will be, some sort of Chinese, AI ban. I'm not saying a blanket ban, but there will be heavy regulations and restrictions because we're gonna find out we're gonna find out whether it's sooner rather than later. What's actually going on? And I'd like to give DeepSeek the benefit of the doubt, but, I don't know. A lot of the reporting, you know, when there's smoke, there's probably fire. Alright. They've already run into a handful of hacks, data breaches, and controversies. Like we said, this already led to a nearly $2,000,000,000,000 in temporary stock losses here in The US economy.
Jordan Wilson [00:18:03]:
Most companies have already recovered, all of that. NVIDIA, as an example, has recovered about 80% of those losses so far. And, hey, here's the other thing to maybe keep in mind that goes along with those temporary stock losses. The CEO of DeepSeek is a Chinese hedge fund cofounder. Stating facts here, y'all. Stating facts. Alright. Speaking of facts, I'm just gonna read this.
Jordan Wilson [00:18:32]:
I'm just gonna read this. This was from yahoo finance. This was their coverage, in the week after DeepSeek was released. Ready? So it said, this week, concerns surrounding DeepSeek led a major sell off of stocks in top American tech companies, including computer chip maker NVIDIA, which saw almost $600,000,000,000 knocked off its valuation. DeepSeek itself is owned by Chinese hedge fund, High Flyer, which uses algorithmic trading techniques to place bets on market movements. And then Liang Wenfeng, High Flyer's chief executive, is also DeepSeek's chief executive. Alright. So a Chinese hedge fund cofounder is the CEO of DeepSeek.
Jordan Wilson [00:19:26]:
And what is this hedge fund, this Chinese hedge fund, Highflyer, known for? It use it uses an algorithm to place bets on market movements. Alright. I'm not gonna speculate on something this big, but I will say the Internet is speculating, that this was market manipulation. Right? That, DeepSeek essentially shorted a lot of The US big tech stocks because this is what the hedge fund, High Flyer, does. Right? They use trading techniques to place bets on market movements according to Yahoo Finance. I don't know. Did you guys know that? Did you do all this research, or did did you and your company just run to deep seek, and start uploading all of your data? Alright? You gotta think about it. So we're gonna go quick here.
Jordan Wilson [00:20:38]:
Alright? And I'm just bringing the facts. Alright. So now I gave you the big picture point of view. I gave you the big picture, good and bad. And now we're gonna go through what's actually happening step by step. If you're if you're listening in, I promise I'm gonna get through these next couple of slides I have here on my screen fairly quickly because I want you to have the whole story. Right? It is so important when using AI at your company. That large language model that you are using is more than a tool.
Jordan Wilson [00:21:13]:
Right? You have to have the utmost confidence in the model's output. You have to have the utmost confidence in its data security. Alright? And let me just go ahead and say this. Alright? Before I get to my my my list of facts, and I wanna take you off chronologically through everything that's happened. Let me just say this. A lot of the traditional media here in The US is to blame for this. A lot of, you know, social media, you know, influencers, which a lot of people, you you know, have opined that they are being paid, by certain companies to, put this information out there. I I I do blame a lot of this on traditional media.
Jordan Wilson [00:22:01]:
I was an investigative reporter before. Right? They blindly just went with this $5,500,000. You know, they they hardly no one reported on the fact that DeepSeek was started by this hedge fund that really just bets on markets. Right? People rushed. Right? There's this tendency in the AI space that we all just wanna click the big easy button. Right? We are looking for the easiest, most impactful shortcut, not necessarily caring or taking the necessary steps to understand what it might mean, the bigger picture. Right? Is your company gonna get fined a hundred million dollars? No. Like I said, that bill is not going to make it.
Jordan Wilson [00:22:54]:
But, I mean, I'm also looking at the people out there that are just blindly peddling deep seek. Right? Because, it's it's it's cheaper. It's it's powerful. Well, okay. When it came out, yes, it was one of the most powerful and most affordable models in the world. But guess what happened after that? OpenAI released updates to their o3 Mini. They also released pricing updates. Google, same thing.
Jordan Wilson [00:23:18]:
So now is is does DeepSeek have this, you know, huge lead when it comes to speed, open source, which it is not, quality? Absolutely not. Absolutely not. In the age of AI in 2025, there's no such thing as an insurmountable lead. And I think when this model came out, everyone just rushed to judgment, rushed to savings, rushed to speed, rushed to fine tuning models, made terrible decisions. Right? So, again, I actually put a post about this on LinkedIn. Go back and look. Who do you follow in AI? Were they blindly copying and pasting like a like a PR company, DeepSeek's claims, telling you you've gotta use this. It's state of the art.
Jordan Wilson [00:24:04]:
It's it's cheap. It's it's open source. It's not. It's not open source. Transparency is everything. Are The US tech companies the most transparent out there? No. But they're much more transparent than what we have from DeepSeek. And, again, we have laws here in The US.
Jordan Wilson [00:24:29]:
I know we have an international audience. Alright? But let me just talk about things here in The US. We have laws. We have data privacy laws, right, that protect us, you know, and you do have to put a certain level of trust in a Microsoft, in a Google, in an OpenAI, in an anthropic, etcetera. But the US government cannot just be like, yo, Microsoft. Yo, OpenAI. Hey, Google. Let me take all this data, and we're just gonna use it for whatever purpose we see fit.
Jordan Wilson [00:24:53]:
Doesn't happen here in The US. That is exactly what happens in China. Right? And everyone is just blindly saying, oh, build on top of DeepSeek. It's so cheap. It's so cheap. Right? They even discounted their prices. When v three came out, they went they went with v two prices for a certain number of weeks just to get everyone using it. Right? I I would not even be using, aside from if it's from perplexity, Microsoft, AWS, I would not be using DeepSeek at all, even from other providers.
Jordan Wilson [00:25:26]:
That's the other thing. Maybe you use tools at your company. You know, AI tools to I don't know. Meeting summarizers, you know, writing tools, whatever it may be. Are they using deep seek? If so, if you're uploading your company files, guess what? If they are using DeepSeek's API, guess who also has access to all of that all of that information, all of those company documents that you're uploading and you probably don't know? China does. Right? I'm not one you you know, I'm not trying to go on a crazy guy, China this, China that, but you are. If you are using any and there's thousands there's thousands of of of pieces of software out there that are using deep seek, and you might not know because they might not tell you. You might have a model selector, so you might have a little bit of of agency when it comes to knowing, but you might not know.
Jordan Wilson [00:26:20]:
A lot of companies, they don't tell you what model they're using. And if you are uploading documents, you are putting yourself at risk. So this also goes out to the software developers out there. If you're going to use deep seek, that's fine. But you need to make it abundantly clear that you are using deep seek. Right? And if you allow users to upload files, you need to be very, very clear and very explicit about what that means. Alright? Alright. Now let's get into what's actually happening.
Jordan Wilson [00:26:49]:
So, DeepSeek, it is the AI chatbot from hedge fund Highflyer. It was launched January 20 with kind of open source, not really, cost efficient r one model, which is its reasoning model. There was 10,000,000 plus downloads within days. It went viral globally. It was the most downloaded app in the iOS store, and they are facing massive data breaches, security flaws, and government bans. So it was launched at a high profile, event in China, and it was unveiled with top government officials, talking about these performance claims and bold costs. So, the training cost was touted at $5,500,000, which is not true. Alright.
Jordan Wilson [00:27:37]:
This is disputed most recently, by Google DeepMind CEO, Demis Hassabis. So, yeah, it's not true. And it's quote, unquote, open source model intended to challenge established US systems. So why the why did it go viral? Well well, it climbed to the number one free app on The US App Store overnight. A lot of big names in tech, said this was the Sputnik moment. Right? They said this changes AI development forever. Right? This means that small tech companies, you you know, that maybe don't have, you know, a billion dollars to train a model. They don't have hundreds or thousands of of top tier engineers.
Jordan Wilson [00:28:19]:
You know, what they were saying is this means that any company with just a couple million dollars and, you know, a couple talented people can change the world. That was false. Alright. Also, there's been a rapid global uptake driven by that low pricing. Just the low pricing alone. Again, you look at it today, r one and and and v three from DeepSeek are not these, you know, sticker shock cheap anymore because of these recent updates, from OpenAI and Google. Although for, like, a week or two, they were exponentially cheaper, and that caused everyone to rush there. So, yeah, if you weren't, you know, downloading, DeepSeek locally, right, if you have a a computer or data center or a cluster with, you know, hundred gigabytes of RAM, but it did position itself as a direct competitor to Chatt GPT.
Jordan Wilson [00:29:08]:
And the headlines, really, the unchecked media coverage led to unchecked social media coverage led to, I think, millions, especially here in America, millions of business leaders blindly following the deep seek whale through the dark sea. January 27, that's when this story really started to unfold because that's when The US tech stocks essentially tanked. Right? NVIDIA shares fell 17% in one day. 600,000,000,000 market share erased, just from NVIDIA. The Nasdaq and S and P experienced sharp sell offs and there was some financial shock over this low cost Chinese AI model. Let's get to that $5,500,000. Right? This was in DeepSeek's research paper. So you again, there's good things.
Jordan Wilson [00:30:04]:
You have to tip tip your cap to them. Right? DeepSeek did, release a lot of information about their model. Right? Was it all a % accurate? I don't know. Some of the smartest people in AI are saying no. It wasn't, or at least it wasn't telling the whole truth because so much of what has happened in the last couple of weeks was predicated on that one number, $5,500,000. Right? They're saying that's how much it costs to train r one, this reasoning model, which at the time, the reasoning models were extremely expensive. Right? Like I said, o3 mini, and o3 mini high, have changed that from OpenAI, Google's, Gemini two point o flash thinking. You you know? So it was exponentially cheaper than other reasoning models at least for a week, and that's what really caused a big bulk of this.
Jordan Wilson [00:31:00]:
But Google DeepMind CEO, Demis Hassabas, labeled these claims as exaggerated. Alright? Demas is obviously one of the smartest people in the world when it comes to AI. Right? He's the Google team I'd CEO. Google essentially invented, large language models for the transformer technology. Alright? So here's what he said. He was quoted as saying, ready, quote, seems to have only reported the cost of the final training round, which is a fraction of the cost, end quote. I said that on the show. I said that on Twitter.
Jordan Wilson [00:31:34]:
I said that every right? When they saw that $5,500,000, everyone rushed and said, oh my gosh. Big tech companies don't need a hundred thousand GPUs from NVIDIA. Right? And that changed everything. Guess what? Yes. You do. You absolutely do. Don't be foolish. Don't be foolish.
Jordan Wilson [00:32:01]:
Right? This is not some groundbreaking, world changing technological advancement. It's not. It's a great model, state of the art, good benchmarks. Would I ever use it? Absolutely not. Right? Unless I'm using it inside of perplexity right now. And and more than anything, I'm just doing it to test it out. I'm not gonna use it. I'm not downloading the app.
Jordan Wilson [00:32:24]:
Absolutely not. And this raised a lot of questions on the hidden cost versus the full development expense. So you also have to look at the semi analysis report. We shared this in the newsletter. We talked about it on our weekly AI news that matters. So the semi analysis report, and if you don't know semi analysis, they are an industry analyst firm. They are, I think, one of the leaders, one of the independent leaders in, looking essentially at the semiconductor industry and the, essentially, the, the technology, the hardware that powers large language models. So this is a world leading, analyst firm that this is all they do, semiconductors, GPUs, AI models.
Jordan Wilson [00:33:12]:
So they reported, their reports revealed that DeepSeek's actual all in costs were closer to $1,600,000,000 in hardware, and that included 50,000 NVIDIA Hopper GPUs. So there's also separate investigations going that said because there's an axe there there's a partial export ban to certain, GPUs, essentially certain AI chips going to certain parts of the world. Some of those including regions in China. Right? So there's also, investigations going on on, like, hey. Did DeepSeq, acquire these chips legally? Do they have these chips? Right? Again, there is so much secrecy. Alright? And I'm just saying what has already been reported out there. OpenAI reportedly has evidence. Right? You wanna talk about even even more things? OpenAI reportedly has evidence that DeepSeek distilled its models from theirs, right, which is not technically legal according to OpenAI's terms of service.
Jordan Wilson [00:34:17]:
Alright. So not only is it like, nah, it didn't cost $5,500,000, and but also a lot even OpenAI reportedly, has evidence that DeepSeq essentially copied their paper. Right? They copied their test. They just distilled. They use OpenAI's models, to go ahead and do some of their training. Let's think about that. Again, these are reports. The the smoke will continue to clear, and we will get in the coming months the full truth.
Jordan Wilson [00:34:55]:
Right? So that's why a lot of these things are not my opinion. These are facts that have been reported. OpenAI also said, and this was less than twenty four hours ago, OpenAI CEO Sam Altman said when he was, confronted about this, he said that OpenAI has, quote, no plans to sue deep seek right now, end quote. I don't know. To me, I'm like, yeah. That means you're definitely suing DeepSeek. Great great PR, response there from from Sam Altman or at least opening the door when you say, hey. No plans to sue DeepSeek right now.
Jordan Wilson [00:35:32]:
But they did say that they are looking into this distillation, these distillation claims. Alright. Now let's go chronological so you can understand what's happening. So January 20, r one was launched as, quote, unquote, open source. Alright. Then, you also had that $5,500,000 training clock cost claim touted, at this event, and then there was bold claims of world changing cost efficiency. So it was kinda quiet for, like, a week. Right? And then January 27, that's when we saw the market shock and the cyber attack.
Jordan Wilson [00:36:12]:
So, essentially, the deep deep seek app on January 27 became the number one, most downloaded free app in The US overnight. At the same time, we saw all the, NVIDIA shares drop. A lot of the other big tech, shares drop. And then we also saw cyberattack force, to forces the cyberattacks forced temporary API sign up limits on deep seek. Alright. And that caused a lot of regulatory blowback and privacy concerns. So, January 29, Italy opened an inquiry over DeepSeek's data collection and storage. GDPR, concerns sparked immediate European scrutiny.
Jordan Wilson [00:36:55]:
And by January 31, Italy banned DeepSeek, and Taiwan banned public agency use. Alright. January 30, the cyber firm Wiz exposed, an unsecured database in DeepSeek's code. More than 1,000,000 chat logs, API keys, confidential information leaked. Did you know that out there? Or were you just rushing to use something free, something cheap, something fast? Did you care about this when clicking that big easy button, that big red easy button? Right? Did you know there were all of these concerns? February 3, research revealed unencrypted transfers in, on three d e s. February 7, it was reported 100% jailbreak vulnerability. That's not good. That's not good.
Jordan Wilson [00:37:54]:
A % of jailbreak attempts were successful, by another cybersecurity firm. And then there was on February 8 reported a device fingerprinting risk. Yikes. Alright. More global bans. Australia banned DeepSeek on all government devices, February 4. February 5, South Korea restricted usage. February 5, also OpenAI alleged unauthorized API use to distill, the models.
Jordan Wilson [00:38:24]:
And then February 6, so last week, US agencies such as the Pentagon, NASA, and Navy have banned deep seek on official devices. Texas did the same thing. They were the first state to do so. Now let's talk about some of the legislative pushback. So February 6, lawmakers proposed a no deep seek bill for government devices. That one is very light well, I won't say very likely, but that one is likely to go through. So in the same way other countries have banned deep seek, on all government devices, we will likely see that, here in The US. Also, guess what? Every every business leader that out there, you rush to use DeepSeek.
Jordan Wilson [00:39:06]:
Right? All all you people spinning up your apps, right, and shoving them down our throats. Right? All you random social media influencers with, you know, oh, I have 300,000, you know, followers on on TikTok. You you know? So everything I say about AI, you need to follow. All those people were blindly pushing deep seek. Guess what? When these bans happen, you're not gonna be able to sell your technology to any government agency, to any school or university. So good luck. Good luck. If you blindly went down this deep seek, you know, hey, it's cheap, it's fast, it's open source.
Jordan Wilson [00:39:47]:
Good luck having a business in the future. You're gonna have to revert back, period. This deep seek model will not be allowed in the near in in the medium term future. It will not be allowed on most public devices. And I wouldn't be surprised if certain states take it even a step further. Alright. And then we have that new, on February 10, it was introduced, the new US bill that would find companies up to a hundred million dollars for just using any Chinese AI. It did not name DeepSeek by name.
Jordan Wilson [00:40:22]:
It more or less covered, any Chinese large language model. Again, that bill is not going to, that proposed bill is not going to become a law. It has no chance. Right? It is extremely restrictive. I used to be a political reporter. It is, it is one of the, I'll say this, one of the most restrictive, proposed bills I've ever seen. Right? Like, million dollar fines for individuals in potential prison time who willingly violate this and use that to know that that won't happen. Yet still, I do think a much less, stringent bill will eventually become law.
Jordan Wilson [00:41:00]:
And then we, already talked about this, but on February 10, Google DeepMind CEO, Demis Hassabis, called DeepSeek's cost claims exaggerated and did say that $5,500,000 was not the total training cost like the entire world believed for two weeks. It was the final training run. And like I said, according to some of the analysis, there was probably more than a billion dollars of total cost that actually went into building the underlying technology. You can't just look at the last training run and then say, oh, this is what the model costs, not how it works. Oh, let's get to the good stuff, terms of service. Yes, y'all. I kid you not. I copied their old terms of service, and then they updated it on January 20.
Jordan Wilson [00:41:48]:
Yes. I'm a dork. No. I don't sleep much. Yes. I use AI to help me with this analysis. But if you look at their old terms of service section 4.3 and compare it to the new terms of service, it's pretty telling. Ready? So the old terms of service essentially said that data processed only that data is processed only to provide, maintain, operate, develop, or improve the services.
Jordan Wilson [00:42:13]:
Alright? New terms of service, section 4.3 says this. It's, it's to block processing, or sorry. To block processing, users must, quote, unquote, provide feedback. Yeah. That's a symbolic, a symbolic measure. There's there's no effective way. And if if if you are using whether on the app, whether you're using their their website, their API, there's no way. There's no way to block data like there is.
Jordan Wilson [00:42:44]:
There's enterprise controls, on open AI's ChatGPT on Claude, on Google Gemini, on Microsoft Copilot. There are plenty of enterprise controls that that you cannot send your data. So not only is there zero way in the new deep seek terms of service to keep your data private, anything that you upload or any service that is using their API by default, right, aside from using those more secure instances, via AWS, Microsoft Azure, perplexity, etcetera, there's no way. There's no way. If you're using their services directly and uploading data, that data belongs to DeepSeek and the Chinese government at any time can just come and say, yeah, we'll take that, and we'll use it for whatever we see fit. So there's no technical opt out of data training. So nearly all of your inputs and outputs are automatically repurposed. So any data stored in China, as you know, is subject to access by the Chinese Communist Party.
Jordan Wilson [00:43:48]:
Still wanna use deep seek directly? So like I said, data sent even via the API is sent to servers in China, and the Chinese government can access it under local laws. What are the risks? Well, surveillance, disinformation, espionage, choose choose pick your poison. Right? And this is viewed widely, especially in the last week after the initial shock in hoopla settled down. It is viewed as a huge national security threat by US Lawmakers. Right? Sorry. They're not the smartest bunch for the most part. I've been covering public or I covered politics, for a while. It's I'd say it's funny, but it's actually sad.
Jordan Wilson [00:44:33]:
Right? You can go back and listen to old testimony, from US Lawmakers on the Internet. They didn't even understand what the Internet was. They said it was tubes of information, you know, like a bank, how you would stick something in a tube. Right? So for the most part, US Lawmakers have no clue how technology works, and AI. Yes. There are some that do. But for the most part, if they did, I would have already expected a real bill. Right? Not a knee slap bill that we saw, you know, like a hundred million dollar fine.
Jordan Wilson [00:45:04]:
But I do see, some sort of restrictions coming sooner rather than later in terms of using Chinese AI. It's too important to The US economy, period. There's national security concerns. There's geopolitical influence that people aren't really looking at. The potential for disinformation and misinformation is rampant the more that models like this are used and unchecked, at either the federal or state level. Let's get to the last point here y'all. Everyone's like open source, 5,500,000. State of the art model, best model in the world.
Jordan Wilson [00:45:42]:
No. No. No. And no. Deep seek is not open source. Let me repeat this. Deep seek is not open source. Also, yes, a lot of the models that you think are open source probably aren't open source either.
Jordan Wilson [00:45:56]:
Right? Like, Llama is not technically open source. Although they are an open source leader. And although I do think DeepSeek's models are great for the open source community, they are not open source. K? So, yes, DeepSeek did, kind of release its full source code and model weights, provided, under an MIT affiliated license, but here's why it's not open source. According to the, Open Source Initiative in their Open Source, AI definition, so that's OSI is the Open Source Initiative. That is the most, reputable, organization out there on Open Source technology. So right now with DeepSeek, there's restrictions on usage in specific domains and or regions, which violates OSI's requirements for unrestricted use for being an actual open source model. That's number one.
Jordan Wilson [00:46:55]:
And then the bigger one, well, DeepSeq does not provide access to its full training datasets or sufficient details to allow independent replication of its models, which again is an open source requirement. So go go check out like I did. Right? Go check out and read the open source initiative, OSIs. Go read their open source AI definition, and you'll see, no, DeepSeek is not an open source model. It's not even close. Just because, you you know, they you you can download a distilled version of it. You can, you know, a 70 b version or, you know, one b version or just because you can download something and fork something does not make it an open source model. We have to stop saying that.
Jordan Wilson [00:47:44]:
Is it good for the open source community? Absolutely. Is this a true open source model? No. Not even close. Yet every single journalist and every single Billy Boy, in his mom's basement that is a, you know, NFT bro turned crypto bro turned AI expert who's telling you it's an open source model using in all your projects. It's a hunt. No. It's not. I don't know.
Jordan Wilson [00:48:06]:
I guess people don't like to read. I guess people don't like the facts. I guess people don't care about seeking the truth. They're just deep seeking a shortcut. Alright, y'all. That was a lot. And it took me a while to do the show. I literally and I'm not exaggerating between, you know, comments on LinkedIn, you know, DMs, emails.
Jordan Wilson [00:48:36]:
You all have been asking about this for weeks. Right? Hey, Jordan. When are you gonna come up with a show on DeepSeek? I said, not yet. Right? When I started this everyday AI thing, if I'm being honest, right, I was like, hey. This is gonna be a newsletter, and I'm gonna do a daily podcast so we have fresh and exclusive insights for the newsletter. I did not anticipate that this podcast, this livestream that turns into a podcast, I did not anticipate that it would become one of the most popular and most listened to AI podcast in the world, if I'm being honest. Right? And over the last you know, I've been doing this almost every single day for, two more than two years now. Is that right? Gosh.
Jordan Wilson [00:49:23]:
I've realized that I actually have a responsibility. Right? And I take that responsibility very seriously. That's why sometimes I don't do, you know, hot takes on something right when it comes out, especially when there's a lot of factors at play that the average business leader in The US doesn't understand. Right? Maybe I'm a little pessimistic. Right? And maybe that's good. Maybe this is my old, you you know, political reporting background, investigative reporting background that comes into play here. Right? But it's the same thing. Anytime a big AI company puts out a press release, I never just read it back to you and take it as truth.
Jordan Wilson [00:50:09]:
I test it rigorously. Right? All the claims that that that we can, right, with our very, very small team. But I take the responsibility of this podcast very seriously. Right? Because I've received a lot of messages, especially over the last year from litter literally, I get messages from Fortune 500, Fortune 100 companies saying that they made an AI decision based on something I said on the podcast. Right? They're like, hey. Our team listened to it. We investigated what you said, and you are right. So this is this is what we did.
Jordan Wilson [00:50:44]:
So I'm not gonna you know, the day that DeepSeq comes out, I'm not gonna come and and come to you with a show that says DeepSeq is the most amazing thing ever. It's open source. It it it is cheap. It is powerful. It is safe. It is transparent because it's open source. No. I'm not gonna do that.
Jordan Wilson [00:51:02]:
I feel a little bit of responsibility because, like, I started the the the the top of the show talking about, Generative AI is already a black box. Right? We need to demand answers. We need to demand transparency. Speaking of deep seek, we need to seek deeply the truth. We need to understand implications. We also need to be cognizant to the fact that AI is about more than AI. Right? For the first time ever, I talked about this. For the first time ever, in 2024, the top six companies in The US by market cap were all in the same industry.
Jordan Wilson [00:51:53]:
Right? AI tech companies more or less. They're all investing in AI. That's never happened before. Okay. AI is the new world economy. And so what happens with that? This is more than, you know, typing in a prompt on a large language model. It's more than that. This is global power.
Jordan Wilson [00:52:19]:
This is geopolitical influence. There's very sophisticated misinformation and disinformation campaigns being run-in the AI space. This is political power. This is military power. This isn't just a chatbot anymore. Right? And that's why sometimes I try to take my time. I try to educate myself. I try to be informed.
Jordan Wilson [00:52:48]:
I try to ask the hard questions and think about those hard questions. So I hope today you can at least see and to answer the question, is DeepSeek AI Sputnik moment or is it a national security threat? I'll say it's something in between. Could it be a national security threat? Seemingly so. According to some of the bills US Lawmakers, in in certain states, have have put out, it does seem like it could be a national security threat. Although, I do not have any firsthand information, but a lot of the reporting and some of these initial bills and laws that have been proposed would lead you to believe that, yes, it is a national security threat. Is it AI Sputnik moment? Absolutely not. All of the tech visionaries and big VCs and everyone else that, you know, on January 20 or January 27 that made those bold claims, they just wanted to be first. It's more important to be factual than it is to be first.
Jordan Wilson [00:53:59]:
The stakes are high, higher than you think. That's why I hope you can appreciate the time that went into putting this show together. And I hope that as you are making decisions, right, whether you are a solopreneur trying to build something, whether you are a leader of a department at a Fortune 500 company, whether you are working in big tech. I hope you take the time to fully understand the implications and everything that went on here. Because like I said, it's bigger than AI. Alright. And this is not the first time. This will not be the last time.
Jordan Wilson [00:54:45]:
So, I hope this was helpful. Thank you for tuning in. If you haven't already, like I said, we're gonna be recapping this, on our in our newsletter. So please go to your everyday a I Com. Sign up for the free free daily newsletter. While you're there, like I said, this was already I already did this. I already covered this before it even happened in our twenty twenty five AI predictions and road map series. So make sure while you're on our website, it's free.
Jordan Wilson [00:55:10]:
You can just go listen to episodes four forty three through four forty seven. Thank you for tuning in. Hope to see you back tomorrow and every day for more everyday AI. Thanks, y'all.