The cost of China’s ‘low-cost’ AI

Monday, January 27, will go down as a turning point in the history of the technology race to dominate artificial intelligence, forcing us to rethink much of what industry and governments have taken for granted in recent years. The emergence of the latest version of DeepSeek, an AI model available for free on the internet and developed in China, shook up the markets and underscored the stratospheric valuation of some American tech companies. DeepSeek offers users basically the same thing as ChatGPT, made by the American company OpenAI, but it has been built at a minimal cost by comparison. It is not just about competition for a good and inexpensive product. The West is facing a potential global invasion by a tool that questions the established business path and aspires to have access to global data with an unprecedented capacity to use it.

The shock comes less than a week after U.S. President Donald Trump announced the so-called Stargate alliance, which would involve an investment of $500 billion in AI, an amount similar to what Nvidia lost on the stock market last Monday. The emergence of DeepSeek questions the need for such huge expenditures, after the company stated that its model was developed with six million dollars. It was also trained in two months with minimal equipment. More importantly, the Chinese AI system requires much less electricity to operate than American models, which poses questions about the huge investments in energy sources that the industry is demanding.

The challenge is not just financial. DeepSeek is open source, which means that its programming code is accessible for anyone to use, correct or improve. This decision ensures transparency and makes it easier for the program to be improved by a multitudinous army of programmers around the world at zero cost, which also questions the viability of the premium subscription payment model implemented by U.S. technology companies.

With a good, cheap and freely accessible tool, China has shaken up the technology market and questioned its financial foundations. In exchange it seeks data, the food of artificial intelligence. Millions of users have rushed to give it away for free by starting to use it. Western platforms also absorb data, but with some regulation involved. That’s where the questions arise: DeepSeek’s servers are in China, where privacy protection policies are negligible.

AI is set to revolutionize the Western economy and will play a key role in the struggle for global geo-economic hegemony between the United States and China, with the EU almost completely missing on that front for the time being. DeepSeek represents an unexpected democratization of access to a disruptive development. But along with its transformative power, AI also has enormous potential to cause damage. The rules under which it will operate are one of the great questions of our time. That debate accelerated on Monday and has become urgent.

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