Tech giants Microsoft and OpenAI are reportedly investigating whether data output from the ChatGPT maker’s technology was secretly taken by a group linked to Chinese artificial intelligence startup DeepSeek.
Microsoft’s security researchers observed individuals they believed to be connected to DeepSeek exfiltrating a large amount of data using the OpenAI’s application programming interface (API), according to a report by Bloomberg News.
OpenAI’s API is the main way that software developers and business customers access its services, buying a licence in order to integrate its models into their own applications.
US firm Microsoft, the largest investor for OpenAI, notified the company of suspicious activity in the autumn, according to the Bloomberg report.
Low-cost Chinese AI startup DeepSeek, an alternative to US rivals, sparked a tech stock selloff on Monday as its free AI assistant overtook OpenAI’s ChatGPT on Apple’s App Store in the US.
DeepSeek’s meteoric rise has raised questions about how a start-up could have become a market leader so rapidly, apparently side-stepping a US ban on Chinese firms using the most advanced microchips available to domestic tech companies.
The Chinese firm has rocked the AI sector by stating that it cost just $6 million to build an AI model using less-advanced chips – a claim some experts have suggested may be too good to be true.
David Sacks, the White House‘s AI and crypto czar, told Fox News in an interview earlier on Tuesday that it was ‘possible’ that DeepSeek stole intellectual property from the US.
‘There’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models,’ Sacks said.
Asked for comment on the Bloomberg report, an OpenAI spokesperson echoed Sacks in a statement that noted China-based companies and others were constantly attempting to replicate the models of leading US AI companies, without specifically naming DeepSeek or any other company.
‘We engage in counter-measures to protect our IP, including a careful process for which frontier capabilities to include in released models, and believe as we go forward that it is critically important that we are working closely with the US government to best protect the most capable models from efforts by adversaries and competitors to take US technology.’
Microsoft declined to comment, while DeepSeek could not be immediately reached for a comment.
It comes as Chinese tech giant Alibaba today announced the release of a new version of its Qwen 2.5 AI model that it claimed surpassed the highly-acclaimed DeepSeek-V3.
The unusual timing of the release, on the first day of the Lunar New Year when most Chinese people are off work, points to the pressure Chinese AI startup DeepSeek’s rise in the past three weeks has placed on not just overseas rivals, but also its domestic competition.
Chinese state media has celebrated DeepSeek’s work for showing that even with limited computing power, firms can ‘create miracles’.
DeepSeek has said its recent models were built with Nvidia’s lower-performing H800 chips, which are not banned in China, sending a message that the fanciest hardware might not be needed for cutting-edge AI research.
Experts have now suggested that the company could have had Beijing’s help in sourcing powerful chips as part of the Chinese government’s drive to get ahead in its battle with the West for technological supremacy and harvest information on its enemies.
Luke de Pulford, director of the Inter-Parliamentary Alliance on China, told MailOnline that the UK and US governments should be worried about the power that could give DeepSeek – and by extension the Chinese government.
He said that under the Chinese Communist Party’s doctrine of Military-Civil Fusion ‘the line between the private sector and state is increasingly blurred.’
‘As with TikTok, DeepSeek has the ability to collect masses of sensitive data, all of which is vulnerable to state interference,’ he said.
‘Aside from violations of data protection, this hands the Communist Party a strategic advantage – they can crunch and analyse intimate information on hundreds of millions of foreign nationals.’
DeepSeek this week became the most downloaded free app in the US – with its skyrocketing popularity seeing the value of its rival AI firms tumble and sending shockwaves through Wall Street and Silicon Valley.
Shadow Security Minister Alicia Kearns said of DeepSeek: ‘There’s no such thing as low cost, because the security and privacy costs are extremely high – let alone the perverted prism through which many answers will be presented.
‘AI may be the space race of our time, but this time every member of our community has a role to play.
‘If your data is going into the hands of the Chinese Communist Party, you’re helping them on this race as they suck every bit of detail about you that they can – even your keystrokes.’
China hawks have labelled it ‘Communist AI’, with a major concern among Western officials being that the chatbot feeds users Chinese propaganda and disinformation.
The chatbot says it is ‘programmed’ to provide answers that toe the Chinese government line, for example refusing to answer questions about Beijing’s crackdown on the 1989 Tiananmen Square protests and declaring that ‘Taiwan is an inalienable part of China’.
