Chinese AI startup DeepSeek announced a temporary halt on user registrations following a large-scale cyberattack on its services. This news comes shortly after its grand debut on Wall Street and its rise as the top-rated free app on Apple’s App Store in the U.S., sparking global attention and concerns.
The app also experienced major outages on Monday, further complicating its rapid growth. Australian Science Minister Ed Husic urged caution over DeepSeek’s success, citing potential risks. “There are questions about quality, consumer preferences, and privacy management that need answers,” Husic told ABC. He emphasized the importance of evaluating such technologies before fully embracing them.
Privacy Concerns Emerge
Husic noted significant differences between Chinese and Western companies regarding user privacy. He stated that while Chinese companies excel at creating efficient products, global markets might view their privacy practices skeptically. “Markets with higher privacy expectations might not adopt these products the same way,” he said, adding that users should remain vigilant.
Despite concerns, DeepSeek has earned praise for its ability to rival Western AI giants at a fraction of the cost. Even OpenAI CEO Sam Altman acknowledged its performance, as DeepSeek surpassed ChatGPT to claim the top spot on the App Store.
Wall Street Impact and Tech Stock Drop
DeepSeek’s Wall Street debut caused ripples in the tech industry. Its free, open-source AI model, DeepSeek-R1, triggered a slump in global tech shares. Leading chipmaker Nvidia saw its stock plunge 11% in early trading, while Microsoft, Meta, and Alphabet also faced declines of 3.8%, 3.1%, and 3.3%, respectively.
The Nasdaq fell 3.1% after the market opened, and the S&P 500 slid by 1.85%, according to Reuters. The popularity of DeepSeek’s cost-effective AI has raised questions about demand for high-tech chips, shaking investor confidence in the AI sector.
A Breakthrough AI Model
DeepSeek recently launched its open-source AI model, DeepSeek-R1, which has gained global attention since its release on January 10. According to Sensor Tower, the app has surged in popularity among U.S. users. Powered by the advanced DeepSeek-V3 model, the AI system boasts cutting-edge reasoning capabilities.
DeepSeek claims its AI surpasses open-source competitors and challenges advanced closed-source models globally. The technology relies on multi-stage training and reinforcement learning to deliver high performance.
Founded by Liang Wenfeng
DeepSeek was founded in 2023 by Liang Wenfeng and is positioned as a cost-effective alternative to advanced technologies from companies like OpenAI and Meta. The startup’s quick success has sparked debates on the balance between innovation, privacy, and market trust.
DeepSeek has since resolved issues with its application programming interface and user logins, as per updates on its status page. However, concerns around security and privacy persist as the startup navigates its rapid rise in the AI landscape.
With its groundbreaking AI capabilities and controversial approach, DeepSeek has cemented itself as a key player in the evolving AI industry.
