China’s Chatbot Rival DeepSeek Stirs AI Market And Leads On App Stores

Illustration of phone with chatbot

DeepSeek, a Chinese start-up, has caused waves through Silicon Valley after releasing a cheaper AI platform that rivals the likes of ChatGPT.

DeepSeek first released its V3 AI chatbot in 2023, and its recent R1 model is turning heads after catapulting to the top of iPhone’s download charts upon its release at the start of January. DeepSeek’s phone app topped iPhone app stores in Canada, China, US, UK, Australia and Singapore, according to App Figures.

DeepSeek V3 and R1 are reportedly more sophisticated and cost-efficient than competitors, whilst using less advanced computer chips and more specialised sets of data.

DeepSeek’s cost efficiency and tech capabilities have called into question the vast amount of spending on AI from US tech giants like Meta, OpenAI, and Microsoft. DeepSeek-V3 was reportedly developed for less than $6 million, compared to the $7 billion spent by ChatGPT in 2024.

The platform has sent a shockwave through tech companies, knocking share prices at chip firms NVIDIA and ASML, and global giants Microsoft and Meta.

Reshaping the Global AI Landscape

The US put export restrictions on advanced AI chips being sent to China in 2021, to curb advanced technologies emerging in the country – making the news of DeepSeek’s new tech surprising to many.

Tech venture capitalist and advisor to President Donald Trump Marc Andreessen called DeepSeek’s R1 model ‘AI’s Sputnik Moment’ – in reference to the first artificial Earth satellite and the Soviet Union-US space race.

Out of a desire to work around US restrictions, the company’s AI models are uniquely open-source, meaning developers can have access to and improve software if they want to. Many developers have started to use DeepSeek’s software to build other tools, which could quicken the pace of AI research in China.

The Chinese company was founded in 2023 by Liang Wenfeng, the leader of AI hedge fund High-Flyer. He told Chinese tech magazine 36Kr that he never created DeepSeek for commercial gain but for a desire to develop and research AI.

He said: “I wouldn’t be able to find a commercial reason [for founding DeepSeek] even if you ask me to”.

“Because it’s not worth it commercially. Basic science research has a very low return-on-investment ratio. When OpenAI’s early investors gave it money, they sure weren’t thinking about how much return they would get. Rather, it was that they really wanted to do this thing”.

Balancing Innovation and Self-Censorship

Because of its Chinese roots, DeepSeek self-censors on topics regarded as sensitive in China. For example, the chatbot tool will decline answering any sensitive China-related geopolitical searches, such as the possibility of China invading Taiwan.

The tool also denies a response to asking why Winnie the Pooh wasn’t allowed in the country – the film’s release banned by the Chinese government due to online comparisons made between General Secretary Xi Jinping and the fictional character.

Despite already garnering popularity in the West, these restrictions could make users go elsewhere and pose challenges for the Chinese company expanding in the West.

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