According to Bloomberg News, OpenAI has accused its Chinese rival, DeepSeek, of leveraging the American company’s AI model to develop its own chatbot.
The introduction of DeepSeek’s open-source R1 model has unsettled global financial markets, as the Chinese firm seemingly achieved results comparable to its competitors despite using significantly less funding and computing power.
These allegations have caused investors to reassess the foundations of the US stock market surge, which has been based on the belief that AI “hyperscalers” require enormous computing resources to train their models. As a result, Nvidia, a leading chip manufacturer, experienced the largest single-day stock decline in history on Monday, though it recovered some of its losses on Tuesday.
On Wednesday, global stock markets stabilized. Japan’s Topix index rose by 0.7%, Australia’s ASX increased by 2.9%, and the FTSE 100 remained largely unchanged at the opening bell.
AI companies and investors are urgently trying to understand the implications of DeepSeek’s rapid progress. OpenAI and its major backer, Microsoft, are investigating whether DeepSeek accessed data unlawfully after noticing individuals exporting large volumes of data from OpenAI’s platforms, Bloomberg reported.
The Financial Times reported that OpenAI, led by CEO Sam Altman, found evidence of “distillation,” which it attributes to DeepSeek. This practice would violate OpenAI’s terms of service.
OpenAI has faced significant criticism for its own handling of intellectual property. The company is preparing for early hearings in a lawsuit filed by the New York Times, where media companies allege that OpenAI used their data without permission.
Nonetheless, these accusations could escalate the technological rivalry between the US and China.
David Sacks, a venture capitalist appointed by former US President Donald Trump as the AI and cryptocurrency “tsar,” stated on Tuesday night that there is evidence of “distillation.” This process involves one AI model repeatedly querying another to learn how to respond effectively.
Sacks told Fox News:
There’s substantial evidence that what DeepSeek did here is they distilled knowledge out of OpenAI models, and I don’t think OpenAI is very happy about this.
I think one of the things you’re going to see over the next few months is our leading AI companies taking steps to try to prevent distillation.
