DeepSeek, deep stink and that ‘Sputnik Moment’

It was called a “Sputnik Moment,” evoking the Cold War rivalry between the United States and the Soviet Union. A symbolic reference to Russia’s launch of the world’s first satellite in 1957 and the dawn of the impeding space race.

But was the hysteria surrounding China’s AI startup DeepSeek this week on the same level as that earth-shattering event nearly 70 years ago, or simply artificial intelligence hype?

Commentators and analysts have become increasingly skeptical after nearly US$1 trillion was wiped off the US tech-driven Nasdaq on Monday. 

DeepSeek’s “innovative engineering” and low-cost rise appeared to upend Silicon Valley’s billion-dollar strategy and state-of-the-art chips before the ‘shock and awe’ wore off.

“Media discussion around DeepSeek is overblown, such as the claim its AI model only cost $5.5 million to develop. As DeepSeek [made] clear, that was the cost of the final training run – not including research and other costs,” Foreign Policy’s China Brief newsletter pointed out.

“The rush to declare sanctions aren’t working is also misplaced. DeepSeek was trained on Nvidia’s H800 chips, which, as ChinaTalk points out, were designed to evade US sanctions [in] 2022. [But the latest] 2023 sanctions kicked in too late to affect DeepSeek’s model.”

China is home to a sophisticated ecosystem of cybercrime.

Mohiuddin Ahmed at Edith Cowan University in Australia

Questions about questions:

• American artificial intelligence research group OpenAI told the Financial Times there was evidence that DeepSeek used ChatGPT datasets to train its chatbot.
• This would be a breach of terms of services, according to a report by Forbes media group.
• Bloomberg also revealed that Microsoft and OpenAI had launched investigations into whether DeepSeek gained access to its ‘data outputs’ in “an unauthorized manner.”

Delve deeper: There are other risks with DeepSeek, such as heavy censoring on political issues related to China, as well as the peeping online eyes of the ruling Communist Party. All personal user data is stored on government servers.

Between the lines: “China is home to a sophisticated ecosystem of cybercrime organizations,” Mohiuddin Ahmed, a senior lecturer of computing and security at Edith Cowan University in Australia, wrote in a commentary for The Conversation this week.

Big picture: “Microsoft and others have accused the Chinese government of collaborating with [these organizations] on cybercrime attacks,” he said.

Beijing calling: While hailing DeepSeek’s achievement, state-run Global Times warned that China’s new tech kid on the block “faces surging cyberattacks.” The tabloid reported that “American IPs,” or internet protocols, were “among thousands targeting the AI startup.” 

China Factor comment: Nothing is what it seems in the opaque world of the Communist Party of China, including this “Sputnik Moment.”