The sudden popularity of the Chinese AI application DeepSeek has raised alarm among U.S. officials, lawmakers, and cybersecurity experts. Since its debut in the U.S. on Monday, the app has not only become the most downloaded free application on Apple’s App Store but also sent shockwaves through Wall Street.
What Is DeepSeek, and Why Is It Controversial?
DeepSeek is a Chinese-developed, open-source generative AI tool that directly competes with leading platforms like OpenAI’s ChatGPT. Its rapid growth in the U.S. has led to concerns about its ties to the Chinese government, especially regarding data privacy, potential censorship, and national security risks.
Unlike U.S.-based AI applications, DeepSeek stores user data on servers located in mainland China, raising concerns about the Chinese government’s access to sensitive personal information.
DeepSeek’s Wall Street Impact
DeepSeek’s launch had a major financial impact, particularly on tech investors. Nvidia, a key player in AI chip manufacturing, experienced a 17% stock drop, wiping off approximately $600 billion from its market value — the largest single-day loss ever recorded for a U.S. stock.
The market response highlights how disruptive DeepSeek’s entry has been, and its influence on AI competition globally.
President Trump called the debut a “wake-up call” and directed the National Security Council (NSC) to investigate its implications on U.S. national security and AI dominance.
National Security and Lawmaker Concerns
Some U.S. lawmakers have voiced strong concerns about DeepSeek. Representative John Moolenaar, head of the bipartisan House Select Committee on the Chinese Communist Party, stated that DeepSeek could leverage U.S. technology to boost China’s AI development.
He urged for tighter export controls to block the transfer of critical technologies that could enhance the app’s capabilities.
Ross Burley, co-founder of the Centre for Information Resilience, warned that the app could be used to collect massive amounts of user data and feed it directly to the Chinese government. Burley highlighted risks such as:
- Behavioral tracking: Understanding Western user preferences and activities.
- Disinformation campaigns: Tailored messaging to influence user opinions.
- Censorship of sensitive topics: Suppressing information that contradicts China’s narratives.
Chinese law allows authorities to access data from companies based within the country, adding to concerns that user data collected by DeepSeek could be exploited by Beijing.
How DeepSeek Differs from TikTok
Although TikTok faced similar scrutiny, DeepSeek presents distinct issues due to where it stores its data. TikTok, owned by China-based ByteDance, faced intense regulatory pressure, prompting it to transfer its U.S. user data to servers operated by Oracle, an American software company.
In contrast, DeepSeek stores its data exclusively on Chinese servers. While TikTok sought to mitigate U.S. concerns through collaboration, no such safeguards currently exist for DeepSeek.
Under the “Protecting Americans from Foreign Adversary Controlled Applications Act,” signed into law by President Biden, U.S. regulators have broad authority to investigate, restrict, or even ban foreign-owned tech platforms that pose a national security risk. However, DeepSeek may avoid direct scrutiny for now since it operates as an open-source large language model.
Potential Censorship and Suppressed Information
Another issue is censorship on the platform. A CBS News analysis found that when users asked DeepSeek for details on sensitive topics like the 1989 Tiananmen Square protests, the app returned no results, reflecting the Chinese government’s strict content restrictions.
Burley argues that this curation of information will place additional pressure on policymakers to regulate the app. “Western governments must consider whether apps like DeepSeek, which push Chinese state narratives, should be allowed on popular platforms like the Apple App Store,” he said.
What’s Next for U.S. AI Policy?
The U.S. government’s immediate response involves a review by the National Security Council, but experts believe that the scope of the investigation could grow. As the Trump administration prioritizes American AI leadership, officials may consider extending current restrictions or even banning apps that compromise data security.
Given the growing rivalry between the U.S. and China in technology and trade, the DeepSeek case could lead to broader discussions about stricter export controls, cross-border data handling, and collaboration with allied nations to limit the spread of Chinese AI influence.
DeepSeek’s explosive U.S. debut is more than just a financial event — it’s a sign of China’s expanding technological influence and a test of how the U.S. can respond to AI threats.
With its data being stored in China and its results reflecting Chinese censorship, the app highlights the risks of foreign AI models gaining traction in the U.S. As policymakers evaluate its potential impact, this case could shape future decisions about the regulation of foreign AI technologies.
The DeepSeek issue underscores the larger competition between the two global powers, with the U.S. seeking to maintain its lead in AI innovation while protecting its national security.