What is DeepSeek, Can It Continue to Disrupt, and Will It Provide EU Innovator Opportunities?
DeepSeek is currently causing waves in the AI tech industry, using customer preferences to personalise responses, help developers write complex code, and streamline customer operations among hundreds of millions of users worldwide.
The generative AI model has a lower carbon footprint, causes stock market disruptions, and impresses tech giants. Discover whether the model will continue to disrupt the industry and how AI innovators in Europe can grasp opportunities based on recent developments.
What Is DeepSeek AI?
DeepSeek is an open-source AI model using natural language processing, reasoning models, predictive analytics, and artificial intelligence to deliver generative AI through chatbot apps to multiple app stores.
The AI model was designed by a Chinese firm making waves as a spotlight Chinese AI startup among other Chinese tech companies. The most recent DeepSeek R1 AI model also uses open-source code, which allows others to use the platform for free.
Who Funds DeepSeek?
DeepSeek is a Chinese startup based in Hangzhou, Zhejiang, funded by a Chinese Hedge Fund called High Flyer and managed by co-founder and CEO Liang Wenfeng, who established the Chinese tech startup in 2023. Not much more is known about Wenfeng.
He graduated from Zhejiang University with AI engineering and computer science degrees. The buzz behind the R1 launch on January 20 even led to Wenfeng's namesake being misidentified. At least a recent closed-door symposium perma record showed the real CEO.
Different DeepSeek AI Models
The DeepSeek models from the Chinese tech startup currently making waves beyond the base model include the following:
DeepSeek LLM Base Model: A free generative AI-powered chatbot that competes with industry leaders like ChatGPT, MetaAI, and Scale AI.
DeepSeek R1 Model: An advanced reasoning model used by developers to generate code snippets, explain complex code concepts, and debug existing code.
DeepSeek Coder: A state-of-the-art coding model developers use to write code in multiple programming languages and optimise existing code.
DeepSeek-V3 Model: An improvement on the base model used to predict multiple tokens or segments of words for faster AI model training and predictive analytics.
Why Is DeepSeek Causing a Stir in the Tech Industry?
DeepSeek clearly had detailed plans to outperform closed-source models and other chatbots for customer service, becoming one of the most notable Chinese tech firms in 2025. The DeepSeek underlying model, GenAI chatbots for customer service, and autonomous processing are disrupting the tech industry for a few good reasons.
DeepSeek Disrupts Tech Stocks and Dethrones Leading AI Models
The New Yorker asked "Is DeepSeek China's Sputnik moment" after the R1 AI model shocked Silicon Valley giants and prompted a major stock sell-off on Wall Street, with the company claiming that it could outperform industry-leading models like ChatGPT or Meta AI.
Meanwhile, Reuters shared how DeepSeek sparked an AI stock sell-off, publishing how NVIDIA experienced record-breaking losses as the stocks fell €23.39 on the 24th of January, 2025, reducing NVIDIA's market share by a staggering €573.2 billion.
Even the tech-savvy IXIC Nasdaq composite index fell 3.1% the same day, showing immediate disruptions to the tech industry. Other headlines suddenly revealed how China's DeepSeek AI dethroned ChatGPT app store downloads from the Apple App Store.
DeepSeek Gains Attention From the Other Tech Giants
Tech investor and venture capitalist Marc Andreessen publically claimed that DeepSeek R1 is AI's Sputnik moment on X while calling it a profound gift to the world in another post. The predictive analytics, computational efficiency, and generative AI capabilities are impressive.
Meanwhile, Alexandr Wang, Scale AI CEO says China has quickly caught the US with Deepseek, claiming that the new open-source model will only take 3-4 years to reach artificial general intelligence (AGI), a desirable benchmark within the AI sector.
European Startups Have a Chance to Catch Up in the AI Race
DeepSeek is already causing technological market disruptions in Europe, with multiple startups using the new DeepSeek R1 model. The DeepSeek R1 game changer challenges Big Tech companies like Microsoft, Meta, Google, Apple, Amazon, and OpenAI.
However, it may also encourage Meta and other generative AI platforms to roll out open-source platforms to continue competing with the new giant. DeepSeek gives Europe’s tech tech firms a chance to catch up in the AI race, albeit with some concerns.
Only the French-owned Mistral has challenged Meta, OpenAI, and other large language models before DeepSeek launched its R1 model. The greatest challenge would be compliant entry in Europe as our startups and venture capitalists face stricter regulations.
DeepSeek could be an extinction level event for other venture capitalists like Mistral and other closed-source large language models if Europe’s investors and innovators don’t latch onto the opportunities. EU VCs will have to partner with companies that ensure compliance with the strict regulations set by various EU authorities to overcome the obstacle.
DeepSeek Offers Cost Savings for a Competitive Advantage
Chinese company DeepSeek provides AI-driven chatbots and language model tools that are 20 to 50 times cheaper than popular open-source models like the OpenAI o1 model or ChatGPT and Meta AI, the biggest advantage the new model has over larger models.
DeepSeek Challenges to Guide AI Innovators in the EU
DeepSeek reasoning and language models show a wide range of opportunities for automated customer service for enhanced customer experiences using predictive analytics. Still, DeepSeek faces some challenges that could guide other AI innovators seeking to personalise customer experiences, especially in Europe.
Censored Prompts EU Investors and Innovators Should Avoid
The Guardian tried out DeepSeek by asking various questions to measure its performance against American AI models like ChatGPT and Meta AI. The AI chatbot performed perfectly until it was asked about Tiananmen Square and Taiwan.
The Chinese AI startup chatbot app quickly responded by typing "Sorry, that's beyond my current scope." Unfortunately, any Chinese tech product cannot contain content that violates or places the country's core socialist values at risk.
Other advanced models from American companies aren't as limited and censored as the Chinese company DeepSeek's products. The DeepSeek chatbot app won't answer questions or prompts related to the Chinese government, socialist rules, or specific figures.
Insights From the DeepSeek Generative AI Industry Challenges
The DeepSeek corporate records aren't readily available and the technical documents are in Chinese, leaving room for criticism. Still, a Business Times article provides insights into the geek behind DeepSeek, explaining how the company owns a patent for chip clusters.
The DeepSeek chip clusters are natural language processing tools used to train AI models but are reportedly made up of 10,000 H100 chips as claimed by the firm in 2022. Scale AI, a leading competitor, asks "Is DeepSeek lying" about the chips, claiming there are 50,000.
DeepSeek also deployed the AI model despite the chip sale restrictions from the Biden administration. Joe Biden banned the sale of the more advanced AI chips like the A800 and H800 chips to China, attempting to stop the revolution of AI in the Far East.
Biden cut China off while expanding the licensing requirements for 40 other countries, removing the sale of advanced AI chips from NVIDIA to ensure that the US can lead the AI revolution. The chips also can't be provided to any company with Chinese headquarters.
DeepSeek's Wenfeng claims to have implemented the H100 chip clusters instead of the H800 advanced chips, reducing computational costs. The patented chip clusters provide impressive computing power while reducing operational costs and AI model training costs.
The use of H100 chips enables one of the leading Chinese tech firms to offer competitive computational power for much less than other larger models. BBC suggested that DeepSeek trained the model for €5.81 million compared to the OpenAI cost of €96 million+.
However, a new research report suggests that the DeepSeek V3 model actually costs €1.25 billion but confirms that many of the costs to date are related to maintenance and ongoing operational upgrades to the GPU chip clusters for sustainable computational power.
Common EU Challenges to Consider for DeepSeek-Inspired AI Models
Many question whether DeepSeek is a wake-up call for Europe's AI innovators, but further queries arise about whether the AI model meets the EU AI Act. The EU AI Act Explained outlines how AI service providers must protect data and intellectual property rights.
Artificial intelligence faces stricter regulations imposed by the EU AI Act, but intelligent banking with AI is charting the future of financial services in Europe as long as innovators understand the local regulations thoroughly and ensure compliance.
DeepSeek wasn't specifically or initially designed for Europe, the United States, or other regions. The AI model typically follows regulations that fit Chinese tech companies. Therefore, some challenges require region-specific business consultancy to overcome.
Furthermore, Europe's industry-leading natural language processing model Mistal AI, warns of a lack of data centers in the region. Training AI models with fewer data centers challenges the capacity of the available data, generative AI models can access and regenerate.
DeepSeek Data Leaks Reveal Room for EU Innovator Improvement
DeepSeek has had some setbacks and has recently made news headlines for leaking sensitive information. Reuters reported on the DeepSeek sensitive data exposed to the web after a New York cybersecurity firm confirmed finding a trove of exposed DeepSeek data.
The cybersecurity company Wiz Research uncovers weaknesses in the infrastructure, with cyber attackers easily accessing internal data, including personal chat histories, hundreds of millions of lines of log streams, and a publicly accessible click house database.
Other data exposed included backend information, operational details, and user-based API secrets. The exposed data also allowed the cybersecurity company to easily escalate user privileges and gain full database control. DeepSeek has serious data protection risks.
Sadly, Forbes suggests that the DeepSeek data leaks exposed 1 million sensitive records and were caused by a misconfigured cloud storage instance that weakened access controls. EU AI innovators must avoid such costly and newsworthy mistakes.
DeepSeek Reveals Opportunities and Lessons for EU Venture Capitalists to Create Innovative Models and Gain Market Entry
DeepSeek may not appeal to the European market itself, and it may not meet the EU AI Act. However, the cost efficiency of using more affordable chips may reveal an opportunity for European investors to develop AI models for the EU market without strict US embargoes.
Generative AI is the face of the future, particularly in banking, finance, FinTech, insurance, and LegalTech. However, the future of European AI companies depends on expert advice, entrepreneurial coaching, and a deep understanding of the EU AI legal landscape.
Speak to our experts who understand the market entry in Germany before innovatively developing generative AI models and chatbots, language models for financial services, or predictive analytics before FinTech acquisitions and investments.
DeepSeek teaches investors and innovators many lessons, reveals typical challenges, and opens the door to various opportunities if business leaders support the development and deployment of generative AI in the EU market with consultancy services from local experts.
DeepSeek Industry Disruptions and Challenges Conclusion
Take inspiration from the DeepSeek generative AI model to ensure cost reduction in development, compliant chatbots for customer service, and personalisation based on customer tone and behaviours. GenAI-enabled customer service can transcend financial services to a new level, but the banking industry has enough regulatory requirements to consider.
Avoid the DeepSeek mistakes, and instead, leverage the biggest advantage. Streamline regulatory compliance with the EU AI Act, GDPR, and other regulatory boards when you contact us to discuss the integration of AI and ML technologies in banking, legal, financial, insurance, FinTech, and other high-risk EU industries.
