OpenAI says Chinese rivals are using its work for their AI apps, raising concerns about unauthorized knowledge distillation. OpenAI has raised concerns about Chinese companies using its AI models to enhance their own.
OpenAI’s statement came after Chinese startup DeepSeek sparked panic on Wall Street this week with its powerful new chatbot developed at a fraction of the cost of its US competitors.
DeepSeek Disrupts AI Tech
DeepSeek’s performance has sparked a wave of accusations that it has reverse-engineered the capabilities of leading US technology, such as the AI powering ChatGPT.
OpenAI said rivals were using a process known as distillation in which developers creating smaller models learn from larger ones by copying their behavior and decision-making patterns, similar to a student learning from a teacher.
DeepSeek used a process called “fine-tuning” on a large dataset of text interactions gathered from ChatGPT’s existing open-source model.
It essentially adapted a pre-trained model to their needs. And it did so far more cheaply (a mere US$6 million investment) and far more quickly than OpenAI and others who have built their own machine-learning models.
DeepSeek claims to have built its AI model without using Nvidia’s top-end AI chips—for which there currently are no substitutes, and without which (it has been assumed) no leading-edge cognitive AI models can be built.
Financial markets had made this assumption, and the shock that it might be wrong has since pummeled Nvidia’s stock.
US Government Monitoring Security Risks
The White House is concerned after OpenAI said Chinese rivals are using its work for their AI apps to compete with US companies. The White House is closely examining the situation. AI and crypto advisor David Sacks highlighted concerns about DeepSeek potentially benefiting from OpenAI’s research. He stated that leading AI companies might soon introduce measures to prevent such distillation.
The US National Security Council is also evaluating possible national security risks associated with DeepSeek. White House Press Secretary Karine Jean-Pierre confirmed that officials are investigating the matter.
US officials are also considering the national security implications of DeepSeek’s emergence, according to White House press secretary Karoline Leavitt.
“I spoke with [the National Security Council] this morning; they are looking into what [the national security implications] may be,” said Ms. Leavitt, who also restated US President Donald Trump’s remarks a day earlier that DeepSeek should be a wake-up call for the US tech industry.
The announcement comes after the US Navy reportedly banned its members from using DeepSeek’s apps due to “potential security and ethical concerns.”.
According to CNBC, the US Navy has sent an email to its staff warning them not to use the DeepSeek app due to “potential security and ethical concerns associated with the model’s origin and usage.”.
Data safety experts have warned users to be careful with the tool, which collects large amounts of personal data and stores it on servers in China.
Meanwhile, DeepSeek says it has been the target of cyber attacks. On Monday it said it would temporarily limit registrations because of “large-scale malicious attacks” on its software.
A banner showing on the company’s website says registration may be busy as a result of the attacks.
Far-Reaching Geopolitical Effects
In December 2024, the outgoing Biden administration unleashed a final flurry of export controls aimed at blocking China’s access to semiconductor-related technology.
Geopolitically, the arrival of DeepSeek signals potentially far-reaching effects on two fronts.
First, DeepSeek’s accomplishment places a spotlight on the AI-semiconductor nexus, which has dictated that whoever wields the world’s most advanced semiconductors controls the AI race. Chips are the foundational technology for all other leading-edge innovations.
But if this nexus can be sidestepped by simply leveraging open-sourced generative AI (without the need to access leading-edge AI chips), this levels the international playing field significantly for everyone.
Second, if the above holds true, then it could diminish the geopolitical leverage that Washington and other governments wield through export controls, sanctions, and other restrictions on tech transfer, at least regarding the development of generative AI.
DeepSeek’s achievement must be viewed through a wider lens of techno-nationalism, which holds that a country’s national security, economic strength, and social stability are linked to the technological prowess of its national institutions, both public and private.
In this context, the US and China are grappling for competitive advantage across all the core power-multiplier industries, from advanced manufacturing to quantum science.
Calls for Enhanced Intellectual Property Rights
OpenAI reiterated its commitment to protecting its intellectual property. The company confirmed that it has already blocked some entities from distilling its models. A spokesperson emphasized the need to collaborate with the US government to safeguard cutting-edge AI technology.
The rise of DeepSeek signals growing competition in the AI sector. However, allegations of unauthorized use of OpenAI’s research have intensified debates over intellectual property rights in AI development.
AI progress often relies on existing research. Most AI models, including OpenAI, are built on publicly available data and prior studies. Critics argue that OpenAI itself has faced accusations of using copyrighted data without proper authorization. If DeepSeek’s methods are unfair, similar scrutiny should apply to all major AI firms.
However, if DeepSeek directly extracted OpenAI’s proprietary data, it raises ethical and legal concerns. Distillation, when done without permission, can undermine years of expensive AI research. Protecting intellectual property is essential for fostering innovation, but excessive restrictions could slow AI advancements worldwide. Finding a balance between protecting research and encouraging fair competition is crucial.
