How DeepSeek is upending AI innovation and investment after sending tech leaders reeling
The tech world experienced a costly and highly consequential wake-up call this week with the revelation that Chinese newcomer DeepSeek had developed an advanced AI model requiring just millions — rather than billions — of dollars in development costs.Despite concerns about DeepSeek security and that it possibly copied rival ChatGPT, the news sent US AI leaders reeling, causing them to lose more than $1 trillion in total market value — including nearly $600 billion from chip king Nvidia alone.The DeepSeek news also raised the possibility that the existing model of AI investment and development might soon be ready for a rethink.
Indeed, rather than a bastion of small-scale disrupters and entrepreneurs, the vast majority of AI funding comes from tech giants such as Microsoft, Alphabet and Meta.It’s the “tech-industrial complex” former President Joe Biden warned in his farewell address last week, lorded over by an emerging oligarchy that he believes has grown so powerful it threatens basic institutions and perhaps even democracy itself. Today’s Internet is dominated by giant technology companies like Google, Facebook, Apple, Microsoft, and Amazon.
Taken together, these digital conglomerates are worth $12 trillion, lording over the US stock market, and earning the moniker “The Magnificent Seven.”And even as DeepSeek threatens to upend their reign, “The Magnificent Seven” has staked much of their fortunes’ future on AI.Should we be worried?“If Big Tech continues to dominate the AI era, we risk [cultivating a culture] where users are products and their data is the most valuable commodity,” says Tom Serres, co-founder of Nautilus Asset Management, referring to Big Tech’s insatiable appetite for data, which it uses to target ads at users.AI may appear to be at the forefront of innovation and opportunity, but it is mostly funded by nation-scale investments from legacy tech giants.
Microsoft recently announced that it will spend $80 billion ...