[Photo Credit to flickr]

A Chinese AI company DeepSeek has disrupted  major tech companies’ stock prices like Nvidia and Meta with their own AI model, positioning itself as a strong competitor to  OpenAI.

The new LLM model of Chinese artificial intelligence start-up company R1 got a lot of attention from people as a competitor of GPT 4o.

DeepSeek has also proven its popularity by reaching the number one ranking on the Apple App Store and Google Play Store.

One of the reasons for DeepSeek’s appeal  is its accessibility- everything is free except the API which normal users won’t need.

In contrast, ChatGPT offers paid subscription plans, with the inexpensive plan costing $20 and the most expensive plan costing $200, which is not a price that most consumers would be willing to pay and with the free plan, there is a ceiling for using.

The latest model that can read files and analyze images has an even lower ceiling.

Given these constraints, DeepSeek is an attractive alternative to many people as it  can read files and analyze images as well.

The reason why they can offer all of these is because of their performance and development costs.

DeepSeek claimed that the development costs only $6 million, a fraction of the development cost of other companies.

It also has a higher cost-to-performance ratio, meaning it can be run locally at an affordable cost for companies willing to use AI for their service with less costs.

DeepSeek is open-sourced, allowing developers to access its  source code and  run on their devices or servers.

The U.S. has restricted  the number of Nvidia chips sold to China in the past administration to stay ahead of the curve in AI technology, but DeepSeek succeeded in building competitive AI using fewer chips.

This has caused Nvidia's stock price to drop as it doesn't rely on as many chips from Nvidia to run.

DeepSeek claimed to have developed the R1 at a fraction of the cost of ChatGPT, leading many to question who would ultimately lead the AI race.

However, DeepSeek also faces several challenges.

The first challenge stems from DeepSeek’s identity as a Chinese company.

When a user asks about sensitive information such as the Tiananmen Square massacre which is censored in China the model responds, “Sorry, that's beyond my current scope, let's talk about something else.”

As artificial intelligence services in China are regulated by Chinese law, they should not give any answer that can be against the country.

This issue is solved when it is run on a local device but solving this issue for their service can be hard as it is out of DeepSeek’s hands.

Additionally, OpenAI and Microsoft launched an investigation on whether DeepSeek obtained their data improperly or not.

They allege  that they observed individuals who might be related to DeepSeek obtaining OpenAI’s data using API. 

The U.S. Navy has banned the DeepSeek app due to privacy concerns as people worry about their privacy for Chinese apps like TikTok.

As artificial intelligence will be the new technological revolution, competing for hegemony in AI technology remains a critical issue.