DeepSeek, the AI startup that has taken the tech world by storm, is facing what it describes as “large-scale malicious attacks” on its services following the meteoric rise of its R1-powered AI assistant.
The company has decided to restrict new signups to users with mainland China telephone numbers, leading to speculation that these attacks may be a coordinated effort by players in the global tech market, disrupted by DeepSeek’s sudden emergence.
This development comes on the heels of DeepSeek’s rapid ascent to the top of app download charts on Apple’s App Store and Google Play Store, underlining its potential to challenge established tech giants and upend conventional wisdom about AI development.
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The phrase “large-scale malicious attacks” has sparked debate about the forces behind the disruptions. Although DeepSeek has not provided detailed evidence or named any perpetrators, industry insiders and analysts have suggested that the startup’s unprecedented success has rattled competitors, prompting possible retaliation.
“The AI supply chain is being fundamentally disrupted,” Vey-Sern Ling, managing director at Union Bancaire Privee, noted earlier.
The attacks, which coincided with DeepSeek’s systems being overwhelmed by unprecedented demand, resulted in the company’s longest reported outage. This move has also led to speculation that the attacks may not only be targeting the startup’s infrastructure but also its ability to expand globally.
DeepSeek’s Impact on Global Markets
The emergence of DeepSeek has had seismic effects on the global tech and financial markets. Within days of the AI assistant’s launch, a staggering $1 trillion was wiped off the valuation of U.S. and European technology stocks. Industry heavyweights like Nvidia, Microsoft, and Alphabet saw sharp declines, as investors began questioning the sustainability of massive AI spending in light of DeepSeek’s claims of cost-efficiency.
DeepSeek has touted its R1 model as a game-changer in AI development, reportedly delivering high performance at a fraction of the cost of models developed by competitors like OpenAI and Google. While the company has not fully disclosed its development costs, its ability to achieve such efficiency has raised questions about the long-term viability of resource-intensive AI strategies employed by Western tech giants.
“DeepSeek’s model challenges the prevailing notion that advanced AI requires massive computing power and energy,” said Jun Rong Yeap, a market strategist at IG Asia. “If this approach proves scalable and sustainable, it could force a fundamental rethinking of how AI development is financed.”
The implications of DeepSeek’s rise extend far beyond its immediate competitors. The startup’s rapid success has disrupted a global AI market already grappling with questions about profitability and scalability. DeepSeek’s claims of cost-efficiency have amplified concerns about the massive investments required to maintain dominance in the field.
“While current leaders like Nvidia have a strong foothold, it is a reminder that AI dominance cannot be taken for granted,” said Charu Chanana, chief investment strategist at Saxo Markets. “The emergence of China’s DeepSeek indicates that competition is intensifying, and future competitors will evolve faster and challenge established companies more quickly.”
The disruption has not been limited to financial markets. DeepSeek’s ascent has also ignited questions about the effectiveness of U.S. trade sanctions aimed at curbing China’s technological advancements. Despite restrictions on the export of advanced chips, including Nvidia GPUs, DeepSeek has managed to develop a competitive AI model, calling into question the efficacy of these measures.
However, the lack of details from DeepSeek about the nature and origin of the “large-scale malicious attacks” has cast doubts on many minds. While the company has framed the attacks as a reaction to its success, some experts believe they may be part of a broader effort to undermine China’s technological advancements.
Others have pointed to the possibility of internal vulnerabilities being exploited by opportunistic actors.
DeepSeek’s decision to limit signups to mainland China users has drawn criticism for potentially stifling its international expansion. The restriction has also fueled concerns about censorship, particularly given the company’s self-censorship policies on politically sensitive topics like Tiananmen Square, Taiwan, and President Xi Jinping.
The restriction also raises questions about how DeepSeek plans to scale its operations while managing the security and stability of its systems.