DeepSeek Is Latest Example of China's Theft and Subvert Economy

As all the big tech companies and major investors in big tech are panicking over the Chinese DeepSeek AI model that seems to outperform leading US AI companies at a fraction of the cost and power consumption, we need to remember that this is how China has been operating for decades, and it is only the latest example of their theft and subvert business model.

China requires foreign companies to hand over their source code if they want to operate in China as part China's "security control" policy to prevent malicious software being introduced into China's critical industries. In reality, this allows China to copy and paste Western technology into own products, pump those products with government funding so they could outperform Western competitors locally and drive them out of China, then do the same globally. China has been stealing Western intellectual property for decades. This theft has become much easier when they started requiring foreign companies to provide their intellectual property if they wanted to do business in China. China has also been bullying and bribing countries and companies around the globe into using their products, especially throughout Africa and Asia.

China's biggest telecom, Huawei, still runs their network devices on Cisco source code, and if you dig deep enough you can find Cisco's code and developer comments inside of many Huawei products. Huawei has also stolen technology and ideas from Apple and Samsung. China has an exact replica of Under Armour clothing in their Uncle Martian brand. HiPhone is practically an exact replica of Apple's iPhone, with Onda Air a copy of iPad Air. Alibaba has copied eBay and Amazon's playbooks. DiDi is China's Uber, which pushed Uber out of China so much that they acquired Uber's China operations and are now offering identical services in other markets beyond China. China also promised a lot to German companies, but ended up taking over their technology and replacing them with own companies, such as what had happened with the high-speed rails and is now happening with automakers, where China is looking to buy out all Volkswagen plants in China and extend its dominance across the globe.

In some ways, China has perfected the Western monopoly playbook, only they do not have to spend resources on research and development, but can simply create copycats and undersell them until all competitors disappear. Meanwhile, the World Trade Organization and most of the world seem happy to allow intellectual theft to serve as a valid business model for an entire nation.

What does this all mean for investors and corporations? Do not sell your products and technologies in China despite possible short term wins. Long-term, you are likely to be pushed out from their market by local competitors funded by the Chinese government, and later face a competitor on the global scale.

What does this mean for AI practitioners? Remember that China will be happy to subvert your platform any time it becomes valuable to them. It might never happen and you might end up saving a lot of money using DeepSeek instead of OpenAI or Meta or Google products. However, there is always a chance that China could change their algorithms to provide you with useless or harmful results if they roll out a competitive service and want to undermine your platform. They could use your inputs to build a competitive product. It is also unclear if the DeepSeek model is truly this cost-efficient, or it is being supported by Chinese government in the background to make it look better than it really is and to drive out Western competitors as they have done before.

At the end of the day, follow your own risk model to determine if it is worth using DeepSeek. And don't look to OpenAI and others as moral superiors when they had scraped gazillions of copyrighted and personal data to build their own models.

How do you feel about DeepSeek and China's business practices in general?