Chinese AI startup DeepSeek has been making waves in the global tech scene following release of its R1 reasoning model that is efficient and cost-effective. The model has impressed industry experts and simultaneously led to comparisons with AI models of OpenAI. However, the rapid rise of DeepSeek has also triggered concerns such as allegations of intellectual property theft and debates over its true capabilities. Many have speculated that its progress signals a major leap toward artificial general intelligence (AGI) while experts argue that the claims are premature. AGI is a concept of an AI system that matches or surpasses human intelligence across various tasks. The R1 model is an impressive step in AI efficiency, but it is not a fundamental breakthrough that brings AGI within reach.

Another common argument is that the success of DeepSeek proves that US export restrictions on advanced GPUs have failed. However, the reality is more complex than one can think of it. DeepSeek researchers had to find ways to make their AI models more efficient due to limited access to cutting-edge Nvidia chips.

The rise of DeepSeek sparked concerns about its impact on Nvidia equipped with fears of some investors that AI models require fewer GPUs and this can threaten dominance of chip giant. Nvidia’s stock took a hit following R1’s release and the long-term impact remains uncertain. More companies may enter the market if AI becomes cheaper to develop and deploy.

There is also confusion over whether the AI of DeepSeek is truly open source. The company has made its R1 model architecture and weights publicly available under a permissive license. However, the model does not qualify by strict open-source definitions. Open-source AI requires transparency about training data and access to full training code. DeepSeek has not provided and many AI developers avoid releasing training datasets due to concerns about copyright issues.

Concerns about data privacy have emerged equipped with critics pointing to the Chinese origins of DeepSeek as a potential risk. DeepSeek stores its data on servers in China and some industry figures argue that its AI poses no greater privacy risk than any other large language model. The R1 model can be downloaded and run locally, but allows users to interact with it without sending data to the servers of DeepSeek. Some companies also host R1 and have confirmed that they are running the model on servers outside of China.