DeepSeek Faces Global Crackdown as Security Concerns Threaten Its Meteoric Rise

Chinese AI startup DeepSeek is under intense scrutiny from governments worldwide, with several countries banning its use in government systems over national security concerns.

Just weeks after taking the world by storm, DeepSeek is now at risk of being stifled by regulatory action, raising doubts over its long-term growth prospects.

DeepSeek’s chatbot burst onto the scene only a few weeks ago, quickly becoming one of the most widely used AI applications in the world. Its sudden popularity caught Silicon Valley giants like OpenAI, Google, and Anthropic off guard, raising fears that China could dominate the AI race.

Unlike Western AI models, which require advanced semiconductor chips and costly infrastructure, DeepSeek functions efficiently on less sophisticated hardware, making it far more accessible. At a fraction of the cost of competitors like ChatGPT and Google’s Gemini, it quickly became a household name among users looking for a powerful yet affordable AI assistant. To make things worse for competitors, it was made open source.

But its rapid rise also had unintended consequences—DeepSeek sent shockwaves through global stock markets.

DeepSeek Impact on Global Market

The release of DeepSeek triggered a market-wide selloff in AI-related stocks, wiping billions off the valuations of major US tech firms. Chipmakers like Nvidia and AMD saw their stocks take a hit, as investors feared that demand for high-end AI chips could shrink if DeepSeek’s low-cost model gained traction. AI software firms and cloud computing giants also saw declines, as DeepSeek’s emergence cast doubt on the West’s AI business model, which relies on high computing power and massive investment in data centers. In China, shares of DeepSeek’s parent company surged, reflecting investor optimism that it had a competitive edge over Western AI firms.

The panic was compounded by the fact that DeepSeek was growing at an unprecedented rate, surpassing ChatGPT’s initial adoption speed. Some industry analysts feared that Western AI companies might struggle to maintain their dominance in the face of such a low-cost competitor.

Why Governments Are Moving Swiftly Against DeepSeek

Despite its success, DeepSeek has come under heavy scrutiny over national security concerns. Several governments worry that, as a Chinese-developed AI, DeepSeek could be used for data collection and surveillance—or worse, to spread misinformation aligned with Beijing’s interests.

One major red flag has been DeepSeek’s refusal to answer politically sensitive questions about the Chinese Communist Party (CCP). Unlike Western chatbots, which engage with controversial topics, DeepSeek reportedly avoids or censors responses related to the Tiananmen Square massacre, Taiwan’s independence, human rights abuses in Xinjiang, and criticism of President Xi Jinping.

This has led to the growing suspicion that DeepSeek is not just an AI chatbot but a potential tool for Chinese government influence.

Countries Move to Ban or Restrict DeepSeek

United States: Proposed Law Could Criminalize DeepSeek’s Use

In response to DeepSeek’s rapid rise, Republican Senator Josh Hawley introduced a sweeping bill that could make using Chinese AI, including DeepSeek, illegal in the US. The proposed legislation would ban US individuals and businesses from using AI developed in China, impose fines of up to $1 million for individuals and $100 million for businesses, and jail offenders for up to 20 years for violating the law.

Although the bill does not name DeepSeek specifically, its timing strongly suggests that Washington is looking to curb the chatbot’s influence in the US.

Australia: Immediate Ban on Government Devices

Australia followed suit by banning DeepSeek from all government systems and devices, citing an “unacceptable security risk.” The country’s Home Affairs Minister, Tony Burke, issued a mandatory directive requiring all government agencies to remove all DeepSeek products from government devices and prevent future installations or use of DeepSeek AI services.

However, the Australian ban does not extend to private citizens, meaning individuals can still access the AI chatbot on their personal devices.

Taiwan: National Security Threat

Taiwan’s Ministry of Digital Affairs also banned government agencies from using DeepSeek, warning that the AI service could endanger national security. The ministry emphasized that DeepSeek’s cross-border data transmission posed a serious risk, as it could lead to information leaks or allow the Chinese government to access sensitive data.

Italy: Europe’s First Ban on DeepSeek

Italy became one of the first European countries to block DeepSeek, raising concerns over data security and privacy. Other European nations are now reviewing potential restrictions, meaning a wider EU ban could be on the horizon.

What This Means for DeepSeek’s Future

The rapid global crackdown could cripple DeepSeek’s expansion and revenue prospects, despite its overwhelming success in the past few weeks. Government bans could restrict its market size, forcing DeepSeek to rely solely on private users. New regulations might deter businesses from integrating DeepSeek’s technology, limiting its ability to compete with Western AI firms. Further scrutiny could slow down investor confidence, affecting DeepSeek’s ability to secure funding for future growth.

While DeepSeek’s low-cost AI model remains a disruptive force, its security risks, geopolitical tensions, and regulatory challenges could ultimately determine whether it becomes a global AI powerhouse—or fades into obscurity under mounting restrictions.

For now, the chatbot that took the world by storm is facing an uncertain future, as more governments weigh the risks of allowing Chinese AI technology within their borders.