On Tuesday, the White House said the National Security Council is reviewing the implications of DeepSeek, a Chinese AI firm.
What Happened: The White House press secretary Karoline Leavitt confirmed the development stating, “This is a wake-up call to the American AI industry,” reported Reuters.
She echoed President Donald Trump’s earlier remarks, saying that the White House remained committed to securing America’s leadership in AI innovation.
The review comes amid fears of intellectual property theft, a concern raised by David Sacks, the White House’s AI and crypto czar.
In a Fox News interview on Monday, Sacks highlighted the AI technique known as distillation, where one model learns from another, as a potential threat.
“I think one of the things you’re going to see over the next few months is our leading AI companies taking steps to try and prevent distillation … That would definitely slow down some of these copycat models,” he said.
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Why It Matters: Earlier, veteran investor Ross Gerber also criticized DeepSeek’s privacy policy, stating that user data might be stored on servers in China.
Meanwhile, Alibaba Group Holding BABA has also introduced a new AI model, Qwen2.5-VL, to rival OpenAI’s offerings.
In response to the competitive threat posed by DeepSeek, OpenAI has also launched a specialized version of ChatGPT for U.S. government agencies.
On Monday, technology stocks globally experienced a sell-off due to concerns that DeepSeek’s cost-effective model could challenge U.S. AI leaders.
Nvidia Corporation NVDA, the leading U.S. maker of high-performance AI chips, saw its shares tumble 17%, erasing approximately $600 billion from its market capitalization — a record one-day loss. The Nasdaq 100 slumped over 3% on Monday witnessing its sharpest decline since Dec. 18.
While in office, former President Joe Biden implemented extensive export controls on AI chips and manufacturing equipment from companies like Nvidia and Advanced Micro Devices Inc. AMD. This was aimed to curb China’s advancements in AI.
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