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AI wars (37)

Deepseek and the Shifting AI Landscape

In the world of high technology, progress often comes with a hefty price tag. In the case of Artificial Intelligence, the most powerful models require cutting-edge hardware, vast amounts of electricity, and significant financial investment. Until recently, this created a playing field dominated by a handful of well-funded American tech giants. This was not meant to last.

The AI Goliaths of USA recently were taken by surprise by China's David: Deepseek. With little funding and access only to outdated NVIDIA hardware, the team behind Deepseek managed to design an AI assistant that performs better and faster and is more transparent on its reasoning. Even more impressive due to its efficient architecture and use of open sources, Deepseek is significantly cheaper and less energy-intensive than its competition. This shift is more than a technical curiosity—it’s a sign of things to come.

The Geopolitical Implications

AI is at the top of the list for global supremacy - controlling the tools of tomorrow means one can yield significant influence both financially and culturally. With Deepseek, China has entered the AI arena with force. Its only a matter of time that the Middle Kingdom also masters  high-tech electronics to make up for the sanctions. It seems obstacles breed innovation and China has time and again proven wrong critics who dismiss it as an inefficient market due to state intervention. Deepseek represents another step towards Beijing's technological self-sufficiency.

The trade-off of the Chinese system is not efficiency but rather liberty. This is best exemplified by Deepseek's refusal to approach certain topics such as the Tiananmen square massacre. We should not forget that ultimately all AI models are shaped as much by policy as they are by training data.

Why This Is Good for the Market

Despite the concerns around censorship, Deepseek’s arrival injects fresh competition into a market that has long been dominated by a small group of US tech firms. This was up to now effectively an oligopoly. Big tech thought it had built a defensible moat where only they could afford to train and deploy advanced AI due to economies of scale and political influence. The oligopoly has stifled innovation in some ways. With the advent of a new and efficient player,  we will see a shift in how AI is developed and deployed worldwide. 

Long term, this will likely influence little the producers of electronics like NVIDIA and ASML. Even the new models will need hardware to run on. However, model developers like OpenAI, Google DeepMind, and Anthropic will have to adapt, innovate, and become more cost-efficient themselves. Their current actions have already decreased their subscription costs and added some new features. In an ironic twist OpenAI is also considering legal action against the DeepSeek team claiming that the model was trained on their data without permission, something that ChatGPT is known for doing itself.

As with any major technological shift, there are trade-offs—censorship and control versus efficency and competition. But one thing is certain: AI is no longer just a US game. The rules are changing, and Deepseek is proof that the future will be shaped by a much broader set of players. If other players, like Europe or India, also want a stake in the future the opportunity is there...but only to those with guts to enter the ring.


 

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