The US Commerce Department is investigating whether the Chinese AI company DeepSeek has been using advanced US chips that are prohibited for export to China, sources familiar with the matter confirmed.
DeepSeek, which recently launched a free AI assistant, has gained massive popularity, becoming the most downloaded app on Apple's App Store within days. This rapid success has stirred concerns about China potentially surpassing the US in AI technology, contributing to a $1 trillion decline in US tech stocks.
However, Chinese AI startup DeepSeek's chatbot achieved only 17% accuracy in delivering news and information in a NewsGuard audit that ranked it tenth out of eleven in a comparison with its Western competitors including OpenAI's ChatGPT and Google Gemini.
The chatbot repeated false claims 30% of the time and gave vague or not useful answers 53% of the time in response to news-related prompts, resulting in an 83% fail rate, according to a report published by trustworthiness rating service NewsGuard on Wednesday.
That was worse than an average fail rate of 62% for its Western rivals and raises doubts about AI technology that DeepSeek has claimed performs on par or better than Microsoft-backed OpenAI at a fraction of the cost.
Within days of its roll-out, DeepSeek's chatbot became the most downloaded app in Apple's App Store, stirring concerns about United States' lead in AI and sparking a market rout that wiped around $1 trillion off US technology stocks.
The Chinese startup did not immediately respond to a request for comment.
NewsGuard said it applied the same 300 prompts to DeepSeek that it had used to evaluate its Western counterparts, which included 30 prompts based on 10 false claims spreading online.
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Moroever, Italy’s data protection authority, Garante, has ordered the immediate blocking of the DeepSeek AI chatbot after the Chinese company failed to adequately address concerns about its privacy practices.
The move follows an investigation into the app's use of personal data, particularly its collection, sources, purpose, legal basis, and whether it is stored in China.
The Garante had asked DeepSeek for clarification on how it processes personal data but found the response unsatisfactory. As a result, the company was instructed to halt the use of the chatbot in Italy, and the app was removed from local app stores. This order came into immediate effect.
DeepSeek, which has recently gained significant attention by offering an AI assistant that claims to perform at a fraction of the cost of US models, has faced growing scrutiny over its data handling practices. The company had previously removed the app from Italian stores in response to the regulator's questions, but this latest action includes blocking the web version of the chatbot as well.
DeepSeek responded by claiming that it should not be subject to Italian regulations or the Garante's authority. However, the Garante's decision is based on concerns over the safety and transparency of how the app handles personal data, particularly when that data is potentially being stored in China.
This move by Italy follows similar concerns in other European countries, including Ireland and France, which have also raised questions about DeepSeek's data privacy practices.
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