DeepSeek vs ChatGPT: Market Shock and AI Debate
Why in the news
A Chinese firm’s AI model, DeepSeek, was said to outperform ChatGPT, setting off headlines about China overtaking the US in AI and raising the question of what it really means.
Key facts
- Geopolitics: reports framed DeepSeek as a threat to US dominance and speculated about hidden Chinese government funding, as it is open source and free.
- Jobs: AI was already expected to displace 85 million jobs by 2025 in customer service, banking and teaching; a free, open model may spread faster. There is also worry China could use it for political leverage, including in India.
- Markets: AI stocks dropped the next day; Nvidia lost $593 billion in a day, and others lost more than $1 trillion.
- Cost: DeepSeek reportedly spent only $6 million on training, while OpenAI has raised billions and seeks more.
Lesson from history
- Britain’s 18th-century textile dominance is credited to machines such as the spinning jenny, but the real drivers were policy: 40-70% tariffs on Indian cotton and cheap American cotton grown with slave labour.
- Similar patterns appear in other technology revolutions, from synthetic indigo (Champaran movement) to electricity and automobiles.
Significance
- AI is shaped by who controls the ecosystem; political, economic and legal decisions matter as much as algorithms.
Exam angle
- Nvidia single-day loss: $593 billion.
- DeepSeek: open source, reported $6 million training cost.