OpenAI has voiced concerns that China's DeepSeek AI models, known for their remarkably low cost, may have been developed using data from OpenAI. This week, Donald Trump called DeepSeek a wake-up call for the U.S. tech industry, following a significant drop in Nvidia's market value—nearly $600 billion—triggered by DeepSeek's emergence.

The debut of DeepSeek sent shockwaves through the AI sector, causing a sharp decline in the stock prices of major AI-focused companies. Nvidia, a leading supplier of GPUs crucial for AI model operation, suffered the most substantial loss, with a 16.86% drop—the largest in Wall Street history. Microsoft, Meta Platforms, Alphabet (Google's parent company), and Dell Technologies also experienced significant declines, ranging from 2.1% to 8.7%.

DeepSeek markets its R1 model as a significantly cheaper alternative to Western AI models like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires far less computing power and had an estimated training cost of just $6 million. Although this claim has been disputed, it has raised questions about the massive investments made by American tech companies in AI, unsettling investors. DeepSeek's popularity surged, reaching the top of the U.S. free app download charts, fueled by discussions surrounding its effectiveness.

Bloomberg reported that OpenAI and Microsoft are investigating whether DeepSeek leveraged OpenAI's API to integrate OpenAI's AI models into its own. OpenAI acknowledged to Bloomberg that Chinese companies and others consistently attempt to extract data from leading U.S. AI companies. This data extraction, a technique called distillation, violates OpenAI's terms of service. OpenAI stated they are employing countermeasures to protect their intellectual property and are collaborating with the U.S. government to safeguard advanced models from exploitation by adversaries and competitors.

David Sacks, President Trump's AI czar, told Fox News that evidence suggests DeepSeek used distillation to extract knowledge from OpenAI models, a practice OpenAI reportedly disapproves of. He anticipates leading AI companies will take steps to prevent future distillation attempts.

The situation highlights the irony of OpenAI's position, given previous accusations that ChatGPT was built using data scraped from the internet. Tech PR writer Ed Zitron commented on this hypocrisy, pointing out OpenAI's reaction to DeepSeek's actions.

OpenAI previously acknowledged in a submission to the UK's House of Lords that creating AI models like ChatGPT without copyrighted material is impossible. This statement, made in January 2024, followed earlier legal challenges. In December 2023, the New York Times sued OpenAI and Microsoft for allegedly using its work unlawfully. OpenAI defended its actions, claiming the training process constitutes "fair use." This followed a September 2023 lawsuit from 17 authors, including George R.R. Martin, alleging large-scale copyright infringement. A 2018 U.S. Copyright Office ruling stated that AI-generated art cannot be copyrighted, highlighting the ongoing debate surrounding copyright in the age of generative AI.