In short, DeepSeek, a Chinese AI chatbot app, has gained fast prominence on the global artificial intelligence landscape. Its rapid ascent-through the Apple App Store and Google Play chart-is a strong competitor to Western AI giants with its use to controversy on data security, geopolitics, and AI innovations. The article attempts to give a comprehensive and updated review of the background, technology, business approach, controversies, and influence on the wider industry of AI caused by DeepSeek.

Origins: From Quantitative Trading to AI Research

DeepSeek’s story begins in the world of quantitative finance. In 2015, Liang Wenfeng, an AI enthusiast and Zhejiang alumnus, co-founded High-Flyer Capital Management, a hedge fund dealing with algorithmic trading using superior statistical methods and deep learning. High-Flyer dedicated high capital investment in setting up GPU clusters and also opened an AI research department to sustain its data-intensive activities.

By 2023, High-Flyer spun off this research arm as DeepSeek, with a mission to build foundational AI models and pursue artificial general intelligence (AGI). Rather than recruiting seasoned industry veterans, DeepSeek aggressively hired PhD graduates from China’s top universities, fostering a culture of hardcore research and rapid innovation. This unique approach-prioritizing cutting-edge research over immediate commercial returns-became a cornerstone of DeepSeek’s success.

Technical Innovations and Model Lineup

Compute-Efficient Training

DeepSeek’s models stand out for their compute efficiency. Despite U.S. export bans on high-end AI hardware, which forced the company to train on less powerful Nvidia H800 chips (compared to the H100s available to U.S. firms), DeepSeek managed to produce models that rival or even surpass Western counterparts in performance and cost-effectiveness.

Model Releases

DeepSeek Coder, DeepSeek LLM, and DeepSeek Chat: Debuted in November 2023, these initial models laid the groundwork for DeepSeek’s subsequent breakthroughs.

DeepSeek-V2: Released in the Spring of 2024, this all-purpose text and image model bested the industry benchmarks and charged much lesser than all its competitors. The emergence of the DeepSeek-V2 forced ByteDance and Alibaba to go down in pricing or provide free access to their own models.

DeepSeek-V3: Launched in December 2024, V3 was reputedly better than open-source models like Meta’s Llama and also closed models like OpenAI’s GPT-4o on all of its internal benchmarks.

DeepSeek-R1: Released in January 2025, R1 is a reasoning model aimed at higher fact-checking and complex problem-solving. It matches OpenAI’s o1 model on key reasoning benchmarks and is particularly strong in STEM fields, document analysis, and instruction-following tasks.

Technical Approach: Reinforcement Learning for Reasoning

DeepSeek-R1’s standout feature is its use of large-scale reinforcement learning (RL) to develop reasoning capabilities, rather than relying solely on supervised fine-tuning. This approach led to significant gains in tasks requiring long-context understanding, mathematical reasoning, and factual accuracy. For example, on the AIME 2024 benchmark, R1’s pass@1 score soared from 15.6% to 71.0% after RL, and with majority voting, it reached 86.7%, matching OpenAI’s o1-0912 model.

The company also distilled R1’s reasoning abilities into smaller, more accessible models, which outperformed state-of-the-art open-source alternatives on reasoning benchmarks.

Business Model: Disruption Through Cost and Openness

DeepSeek’s business strategy is as unconventional as its technical approach. The company offers its models and services at prices well below market value, with some products available for free. This aggressive pricing has forced competitors to follow suit, disrupting established revenue models in the AI sector.

Notably, DeepSeek has not taken outside investor money despite strong venture capital interest, instead relying on efficiency breakthroughs to maintain cost competitiveness. While some experts question the sustainability of these claims, the strategy has attracted a large developer community. On Hugging Face, over 500 derivative models of DeepSeek R1 have been created, amassing 2.5 million downloads.

Although DeepSeek’s models are not “open source” in the strictest sense, they are distributed under permissive licenses that allow for commercial use, further accelerating adoption and innovation.

Real-World Impact and Industry Response

Market Disruption

DeepSeek’s rapid ascent has had tangible effects on the global AI market. Its success contributed to an 18% drop in Nvidia’s stock price in January 2025 and prompted public responses from industry leaders like OpenAI CEO Sam Altman and Meta CEO Mark Zuckerberg. Microsoft, while making DeepSeek’s R1 model available on Azure AI Foundry, has banned its employees from using the DeepSeek app due to data security and propaganda concerns.

Adoption and Usage

In March 2025, DeepSeek had accumulated over 16.5 million visits, making it the second-most-used chatbot in the world, the first being ChatGPT with over 500 million weekly active users. Developers and enterprises are increasingly experimenting with DeepSeek’s models, drawn by their performance and permissive licensing.

Controversies: Security, Censorship, and Geopolitics

Data Privacy and Security Concerns

DeepSeek’s Chinese origins and data practices have sparked significant controversy. Since Chinese servers store user data, Chinese laws regulate them, raising doubts about governmental access and surveillance. Furthermore, DeepSeek’s models comply with Chinese internet regulations by censoring topics the government considers sensitive, such as Tiananmen Square and Taiwan.

Global Bans and Restrictions

A growing list of countries and organizations have banned or restricted DeepSeek, particularly on government devices, citing national security and privacy risks:

• United States: The Navy, Pentagon, NASA, and several federal agencies have blocked DeepSeek, with Texas leading state-level bans.
• Australia: All government agencies are required to remove DeepSeek products from their systems.
• Italy: The Italian Data Protection Authority banned DeepSeek over data handling concerns.
• Taiwan and South Korea: Both countries have prohibited DeepSeek in government and critical infrastructure sectors.
• India: The Ministry of Finance extended its ban on AI tools to include DeepSeek.

Microsoft, too, has banned employee use of DeepSeek, and New York State has prohibited it on government devices.

The Road Ahead: Challenges and Opportunities

DeepSeek’s future remains uncertain. While the company is expected to continue improving its models, it faces mounting regulatory scrutiny and geopolitical headwinds. The U.S. government is reportedly considering a nationwide ban on DeepSeek for government use, and other countries may follow suit.

Despite these challenges, DeepSeek’s technical achievements and disruptive business model have reshaped the global AI landscape. Its focus on reasoning, cost efficiency, and developer accessibility has set new industry benchmarks and forced established players to adapt.

Conclusion

DeepSeek evolved from a hedge-fund-backed research lab into a global AI disruptor, reflecting the industry’s growing competition and geopolitical stakes. Its new-age systems, aggressive pricing, and rapid adoption have unsettled Western AI markets, sparking concerns over data privacy, security, and state influence in technology. As different players wrestle with these issues, DeepSeek’s trajectory signals possible shifts in AI innovation, regulation, and global competition. To grasp the future of artificial intelligence, developers, enterprises, and policymakers must understand DeepSeek.