DeepSeek: A Game-Changer in the AI Industry

A new name is making waves in the artificial intelligence landscape: DeepSeek. This AI assistant, developed by the Chinese company DeepSeek, has been gaining significant traction online, thanks to its rising popularity on social media.

Back in January, DeepSeek introduced its AI model, DeepSeek (R1), positioning it as a direct competitor to advanced AI systems like OpenAI’s ChatGPT o1. What sets it apart? DeepSeek achieves high-performance AI capabilities at a significantly lower cost compared to its rivals.

Designed with user convenience in mind, DeepSeek serves a variety of functions, from answering inquiries to generating creative content—much like ChatGPT and Google’s Gemini. However, unlike leading American AI platforms that offer free access with paid options for advanced features, DeepSeek provides its full services at no cost.

Expanding its capabilities, DeepSeek recently unveiled an AI image generator named Janus-Pro. This tool is designed to compete with well-established image generators like DALL·E 3, Stable Diffusion, and Leonardo, particularly in the US market.

With its innovative approach and accessible model, what truly differentiates DeepSeek from the rest? How does it operate, and why is it capturing so much attention?

The Establishment of DeepSeek

DeepSeek was founded in 2023 by hedge fund manager Liang Wenfeng and is based in Hangzhou, China. The company focuses on creating open-source large language models.

As an open-source platform, it allows developers to tailor the technology to their specific needs. While relatively unknown before January, the release of its AI assistant has sparked enthusiasm for AI advancements, positioning DeepSeek as a potential challenger to U.S. tech giants that depend on substantial investments in chips, data centers, and energy.

The Technology Behind DeepSeek

Cost-Efficiency Through Innovation

DeepSeek has achieved remarkable AI performance while significantly reducing costs. For instance, training its leading model, DeepSeek-V3, reportedly cost just US$6 million—far less than the US$100 million or more that competitors like OpenAI invest in models such as GPT-4. This cost efficiency is driven by cutting-edge innovations, including:

• Mixture-of-Experts (MoE): DeepSeek's models activate only a fraction of their total parameters (e.g., 37 billion out of 671 billion in V3) per token, substantially lowering computational overhead.
• Multi-Head Latent Attention (MLA): This technique compresses the model’s key-value cache into a latent vector, allowing for efficient inference without compromising accuracy.
• Reinforcement Learning (RL) for Reasoning: DeepSeek’s R1 series leverages reinforcement learning to improve reasoning skills without the heavy cost of supervised fine-tuning.

Open-Source Advantages

By making its AI models openly accessible, DeepSeek fosters global innovation. Developers can explore, customize, and refine these models, pushing AI advancements at a faster pace. This transparency stands in contrast to many U.S.-based AI providers, which keep their architectures and training processes under wraps.

Understanding How DeepSeek Works

DeepSeek is a conversational AI designed to comprehend and respond to natural language queries. Users can interact with it to ask questions, seek project assistance, conduct research, draft emails, and solve reasoning problems through its DeepThink feature.

The platform offers two large language models (LLMs): DeepSeek-V3 and DeepThink (R1). DeepSeek-V3 functions similarly to ChatGPT, delivering quick responses, generating content, rewriting emails, and summarizing documents. Meanwhile, DeepThink (R1) serves as an alternative to OpenAI’s ChatGPT o1 model, which requires a subscription—yet both DeepSeek models remain free for users.

Accessible via web browsers and mobile apps for iOS and Android, DeepSeek quickly gained popularity. By late January 2025, its app had become the most downloaded free application on both Apple's App Store and Google Play in the US and numerous other countries.

Utilizing advanced machine learning models, DeepSeek processes information efficiently, making it highly versatile. A standout feature of DeepThink (R1) is its ability to display its exact reasoning process and the time taken to formulate a response before providing a detailed answer—setting it apart from other AI tools.

Self-Censorship, Data Privacy, and Other Concerns

Trust plays a crucial role in AI adoption, and DeepSeek may encounter resistance in Western markets due to concerns over data privacy, censorship, and transparency. Similar to the scrutiny that led to TikTok bans, questions surrounding data storage in China and potential government access have raised alarms.

Additionally, there are fears that AI models like DeepSeek could contribute to the spread of misinformation, reinforce authoritarian narratives, and influence public discourse to serve specific interests.

For instance, when queried about sensitive subjects such as the 1989 Tiananmen Square massacre, Taiwan's status, or other politically sensitive topics, DeepSeek initially offered accurate responses but quickly replaced them with a generic message: "Sorry, that's beyond my current scope. Let's talk about something else."

In some cases, the AI skipped providing an initial response altogether and defaulted to that answer. Another frequent deflection was: "Let's chat about math, coding, and logic problems instead!"

While US-based AI companies have faced criticism for generating false information or making inappropriate suggestions, DeepSeek's selective censorship raises additional concerns. It allows jokes about US presidents Joe Biden and Donald Trump but avoids including Chinese President Xi Jinping in similar discussions.

DeepSeek has yet to respond to inquiries regarding its apparent censorship of specific topics and individuals.

Cutting-Edge Innovation and Cost Savings

DeepSeek is making waves in the AI industry with its impressive performance, rivaling and even surpassing leading models. Its R1 model outperforms OpenAI's o1-mini across several benchmarks, and a study by Artificial Analysis places it ahead of AI systems from Google, Meta, and Anthropic in terms of overall quality.

While benchmark results fluctuate as AI models evolve, what truly sets DeepSeek apart is its unexpectedly low development cost. The company claims its models require significantly less computing power, resulting in drastically lower expenses. However, these cost claims remain unverified by independent sources.

Reportedly, DeepSeek-R1 was developed on a budget of approximately $5.5 million—far less than the estimated $100 million spent on OpenAI's GPT-4. This efficiency is attributed to the use of less advanced Nvidia H800 chips and innovative training techniques that maximize resources while maintaining high performance.

Despite these claims, some industry analysts remain skeptical. Speculation suggests that DeepSeek may possess as many as 50,000 Nvidia H100 chips but avoids acknowledging them due to U.S. export restrictions. When approached for clarification, the company did not provide an immediate response.

Market Disruption and Global Impact

These developments sent shockwaves through the stock market, causing major fluctuations in the valuation of tech companies. According to Forbes, Nvidia’s market capitalization saw drastic swings—losing approximately $590 billion on Monday, regaining around $260 billion on Tuesday, and then dropping another $160 billion by Wednesday morning. Other major technology firms, including Oracle, Microsoft, Alphabet (Google's parent company), and ASML, also suffered substantial losses.

DeepSeek’s meteoric rise has significantly disrupted the global AI landscape, defying the notion that cutting-edge AI advancements require massive financial backing. Silicon Valley investor Marc Andreessen likened this shift to a "Sputnik moment" in artificial intelligence, underscoring its significance.

Despite the acclaim for its innovations, DeepSeek has not been without challenges. The company endured cyberattacks that led to temporary restrictions on new user registrations.

Meanwhile, former President Trump characterized DeepSeek’s rise as a "wake-up call" for the U.S. AI sector. OpenAI, in a statement to the Financial Times, accused DeepSeek of leveraging its AI models for training, allegedly violating OpenAI’s terms of service. White House AI advisor David Sacks echoed this concern on Fox News, stating that strong evidence suggests DeepSeek used a method called "distillation" to extract knowledge from OpenAI's models. This technique allows a smaller AI model to emulate the capabilities of a larger one while using significantly less computational power.

Regardless of these controversies, DeepSeek remains committed to its open-source approach, proving that groundbreaking advancements are possible even with limited budgets. The past week has demonstrated that its cost-effective strategy has challenged AI industry giants like OpenAI and could force companies such as Nvidia to adapt. This disruption paves the way for further innovation, particularly in AI infrastructure and accessibility.

How Is DeepSeek Different from ChatGPT?

DeepSeek claims its R1 model matches ChatGPT o1, so I tested both. Let’s compare them based on functionality, performance, use cases, and developer experience.

Core Functionality & Performance

DeepSeek

DeepSeek R1 excels at logic-heavy tasks like coding and math. It provides concise, accurate answers, making it great for structured problem-solving. While DeepSeek suggests R1 rivals ChatGPT o1, it leans more toward efficiency and technical precision.

The interface is simple but lacks features like chat memory or voice mode, making it feel more like a task-oriented tool than a conversational AI.

ChatGPT

ChatGPT o1 is more conversational and adaptable. It’s ideal for creative writing, brainstorming, and casual discussions while still handling technical topics effectively.

Its interface is more polished, featuring chat history, voice mode, and customization options, offering a more interactive experience.

Summary: DeepSeek R1 prioritizes technical accuracy, while ChatGPT o1 provides a more engaging and versatile AI experience.

Performance & Speed

Both models delivered similar responses when tested with the same prompt. ChatGPT o1’s replies were more detailed, while DeepSeek R1 was more direct and efficient.

Speed-wise, there was no noticeable difference—both generated responses quickly and reliably.

Specialized Use Cases

DeepSeek

DeepSeek R1 is best for technical and structured tasks like coding, mathematical reasoning, and logic-based queries. It’s a strong choice for developers and researchers needing precise, no-frills answers.

ChatGPT

ChatGPT o1 is more flexible, excelling in creative writing, brainstorming, and open-ended discussions. While it can handle technical topics, it tends to offer more context and explanation, which some users may prefer.

Developer Experience: APIs & Accessibility

DeepSeek

DeepSeek’s API is compatible with OpenAI’s format, allowing easy integration with existing OpenAI tools. It’s open-source, meaning developers can run models locally for better customization. However, its documentation is still evolving.

DeepSeek offers API access at a lower cost than OpenAI, making AI-powered features more affordable for developers.

ChatGPT

OpenAI provides a well-documented API with extensive resources, tutorials, and community support. Many companies already integrate OpenAI’s API into their apps.

Unlike DeepSeek, OpenAI’s models are not open-source or downloadable, which is a key distinction.

Why DeepSeek AI Could Be a Game Changer for Your Business

For companies seeking to leverage AI without excessive costs, DeepSeek presents an attractive opportunity. Here’s why it could be a valuable addition to your business strategy:

1. Cost Efficiency

With training expenses significantly lower than those of comparable U.S. models, DeepSeek helps businesses cut AI-related costs while maintaining high performance.

2. Customization

As an open-source platform, DeepSeek allows for extensive modifications, enabling businesses to tailor the model for tasks such as customer support, coding, and data analysis.

3. Continuous Innovation

With a growing community of developers and enterprises contributing improvements, DeepSeek evolves rapidly, ensuring users stay ahead in AI advancements.

4. Competitive Advantage

Implementing an efficient and powerful AI system can provide a strategic edge, particularly in industries reliant on automation and large-scale data processing.

5. Global Adaptability

While concerns about content moderation persist, businesses are finding ways to localize or adapt DeepSeek’s output to align with regional market requirements.

Conclusion

DeepSeek AI is more than just another language model—it represents a transformative shift in how advanced AI is developed, deployed, and accessed. By challenging the conventional high-cost, proprietary approach, DeepSeek is making AI more accessible while igniting discussions about affordability, transparency, and innovation.

As the AI landscape continues to evolve, DeepSeek serves as proof that open collaboration and strategic resourcefulness can disrupt the status quo—potentially reshaping the future of artificial intelligence.