On January 29, 2025, 
OpenAI publicly stated that it has evidence proving DeepSeek, a Chinese artificial intelligence (AI) startup, used OpenAI’s technology to create its own AI model. This claim has sparked intense debate over intellectual property rights in AI and global competition in the industry.
The Allegations: What OpenAI Claims
According to OpenAI, DeepSeek copied its technology through a process called “model distillation.” This technique involves using a high-performing AI system to train another model, effectively transferring its capabilities. If true, this would mean DeepSeek’s AI was built on OpenAI’s research without permission, potentially violating intellectual property laws.
DeepSeek, founded in May 2023 and headquartered in Hangzhou, China, has rapidly developed AI models that rival OpenAI’s ChatGPT. Their latest model, DeepSeek R1, is reported to perform at a level similar to leading AI models but was developed at a fraction of the cost. OpenAI suggests that the reason for DeepSeek’s quick progress is its unauthorized use of OpenAI’s work.
The Cost Factor: A Red Flag?
One of the main points fueling OpenAI’s claims is the cost difference in developing AI models. OpenAI’s GPT-4 reportedly required over $100 million to train, while DeepSeek R1 was built for just $6 million. This massive gap raises questions: Did DeepSeek find a way to dramatically cut costs, or did it use existing technology from OpenAI to speed up development?
If DeepSeek truly used OpenAI’s research, it would explain how it was able to achieve high performance at a much lower cost. However, DeepSeek has not admitted to using OpenAI’s work, and no court or independent research has yet confirmed OpenAI’s allegations.
Microsoft’s Investigation
Microsoft, a significant partner of OpenAI, is investigating whether a group associated with DeepSeek improperly obtained data outputs from OpenAI’s technology. This inquiry aims to determine if there was unauthorized access or misuse of proprietary information.
DeepSeek’s Data Practices and Security Concerns
DeepSeek’s application has raised national security concerns in the United States due to its practice of storing user data on servers located in China. Experts warn that this could pose risks similar to those previously associated with other applications storing data in China. Additionally, DeepSeek’s AI model has been observed to censor topics considered politically sensitive by the Chinese government, such as the 1989 Tiananmen Square protests and the status of Taiwan.
The Impact on the AI Industry
This accusation comes at a time when the AI race between the U.S. and China is growing more intense. DeepSeek’s rise has already caused concern among U.S. companies. Nvidia, a major AI chip manufacturer, saw a 12% drop in its stock price due to fears that China’s AI advancements could reduce its dominance in the industry. If OpenAI’s allegations prove true, it could have major consequences for AI regulations, intellectual property enforcement, and international competition.
Market Reactions and Industry Impact
The emergence of DeepSeek’s AI model has had significant repercussions in the tech industry. Nvidia, a leading AI chip manufacturer, experienced a substantial drop in its stock value following DeepSeek’s announcement. Analysts suggest that while DeepSeek’s advancements might shift the landscape, Nvidia’s hardware will still be integral to future AI developments.
Is OpenAI’s Evidence Strong Enough?
OpenAI has stated it has “proof” of DeepSeek’s use of its technology, but details of this proof have not been fully disclosed. Without seeing the exact evidence, it is difficult to determine if OpenAI’s claim will hold up under scrutiny. If OpenAI has detailed logs, code similarities, or access records linking DeepSeek to its proprietary data, the case could be strong. However, if the proof is circumstantial—such as DeepSeek’s rapid progress and cost advantages—it may not be enough to prove wrongdoing definitively.
The Bigger Picture
Regardless of whether OpenAI can prove its claim, this situation highlights larger issues in the AI industry. As AI development continues at a fast pace, companies must find ways to protect their research while also promoting fair competition. If OpenAI’s allegations are true, it could lead to stricter protections for AI intellectual property. If not, it may signal that other companies can develop high-level AI without relying on OpenAI’s technology.
For now, the world is waiting to see whether OpenAI will release concrete proof. Until then, the question remains: Does OpenAI truly have evidence, or is this an attempt to slow down a rising competitor?