“What their economics look like, I have no idea,” Rasgon said. “But I think the price points freaked people out.”
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What DeepSeek means for U.S. companies
Behind the drama over DeepSeek’s technical capabilities is a debate within the U.S. over how best to compete with China on AI.
“Deepseek R1 is AI’s Sputnik moment,” said venture capitalist Marc Andreessen in a Sunday post on social platform X, referencing the 1957 satellite launch that set off a Cold War space exploration race between the Soviet Union and the U.S.
Andreessen, who has advised Trump on tech policy, has warned that over regulation of the AI industry by the U.S. government will hinder American companies and enable China to get ahead.
But the attention on DeepSeek also threatens to undermine a key strategy of U.S. foreign policy in recent years to restrict the sale of American-designed AI semiconductors to China. Some experts on U.S.-China relations don’t think that is an accident.
“The technology innovation is real, but the timing of the release is political in nature,” said Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies. Allen compared DeepSeek’s announcement last week to U.S.-sanctioned Chinese company Huawei’s release of a new phone during diplomatic discussions over Biden administration export controls in 2023.
“Trying to show that the export controls are futile or counterproductive is a really important goal of Chinese foreign policy right now,” Allen said.
Trump signed an order on his first day in office last week that said his administration would “identify and eliminate loopholes in existing export controls,” signaling that he is likely to continue and harden Biden’s approach.