Microsoft and OpenAI are investigating whether individuals linked to Chinese AI startup DeepSeek accessed OpenAI’s technology without authorization. According to sources cited by Bloomberg, Microsoft’s security team detected suspicious activity in late 2024, where individuals believed to be connected to DeepSeek extracted large volumes of data from OpenAI’s API.
OpenAI’s API allows developers to integrate its proprietary AI models into their applications through a paid license. If confirmed, unauthorized data extraction could violate OpenAI’s terms of service or indicate an attempt to bypass usage restrictions. Microsoft, OpenAI’s largest investor, flagged the suspicious activity, prompting further scrutiny.
The U.S. government is also raising concerns. President Donald Trump’s AI czar, David Sacks, claimed in a Fox News interview that DeepSeek may have used “AI distillation” to replicate OpenAI’s models. This technique involves training one AI model using the outputs of another. This could allow DeepSeek to develop a high-performing model at a fraction of the usual cost.
“We know PRC-based companies and others are constantly trying to distil the models of leading U.S. AI companies,” an OpenAI spokesperson stated, without directly naming DeepSeek. OpenAI pointed out its ongoing efforts to protect intellectual property and work closely with the U.S. government to prevent competitors from accessing its most advanced AI capabilities.
DeepSeek’s rapid rise has unsettled Silicon Valley. The company recently released its DeepSeek-R1 model, claiming it rivals or surpasses AI systems from OpenAI, Google, and Meta while being developed at a significantly lower cost. This unexpected breakthrough triggered a tech stock selloff, wiping nearly $1 trillion in market value from major AI players, including Microsoft, Nvidia, Oracle, and Alphabet.
The investigation just shows the growing U.S.-China tensions in artificial intelligence. As Washington tightens export restrictions on advanced AI chips, Chinese firms like DeepSeek are proving they can still compete at a global level.
Whether DeepSeek’s success was achieved through legitimate innovation or unauthorized data access remains a pressing question.
