OpenAI has launched an investigation into whether Chinese AI startup DeepSeek improperly used its proprietary AI data to develop its low-cost R1 model, which has shaken the AI industry and triggered a selloff in U.S. tech stocks.
The inquiry follows a Bloomberg report that both OpenAI and its largest backer, Microsoft (NASDAQ: MSFT), are probing whether DeepSeek or associated entities illegally extracted knowledge from OpenAI’s models using distillation techniques.
DeepSeek’s AI Model Raises Concerns in Silicon Valley
DeepSeek’s R1 model, released earlier this month, has made waves by matching the performance of OpenAI’s ChatGPT while operating at a fraction of the cost. This has raised suspicions that the company may have leveraged unauthorized access to OpenAI’s technology.
“We know that groups in the PRC are actively working to use methods, including what’s known as distillation, to try to replicate advanced U.S. AI models,” an OpenAI spokesperson said. “We are aware of and reviewing indications that DeepSeek may have inappropriately distilled our models, and we will share information as we know more.”
Microsoft, a key OpenAI investor, has also reportedly launched its own probe into DeepSeek’s practices but declined to comment publicly on the matter.
What Is AI Distillation and How It Could Be Used?
Distillation is a machine learning technique where a smaller AI model learns from a larger, pre-trained “teacher model”, potentially extracting proprietary insights. The process is commonly used to reduce computational costs, but if misused, it could serve as an intellectual property theft technique.
David Sacks, Trump’s AI and Crypto Czar, claimed in an interview on Fox News that there is “substantial evidence” suggesting that DeepSeek used distillation techniques to extract knowledge from OpenAI’s AI models.
“They can suck the model out of the parent model,” Sacks said, but did not provide concrete evidence to support his claim.
Nvidia Responds to DeepSeek’s Rapid AI Progress
While the controversy unfolds, Nvidia (NASDAQ: NVDA) weighed in on the situation, describing DeepSeek’s R1 model as an “excellent AI advancement” and a “perfect example of test-time scaling.” The statement signals that Nvidia sees DeepSeek’s success as part of the broader evolution of AI, rather than outright malpractice.
U.S. Scrutiny on Chinese AI Firms Intensifies
This investigation marks the latest escalation in U.S. scrutiny over Chinese AI advancements, as Washington has already been imposing strict export controls on advanced AI chips to prevent China from developing cutting-edge AI models. If OpenAI and Microsoft find proof of intellectual property theft, it could intensify regulatory actions against DeepSeek and other Chinese AI firms.
Source: Bloomberg
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