OpenAI calls for bans on DeepSeek and other Chinese open-source AI models while it remains closed-source

OpenAI has submitted a policy proposal to the U.S. government urging a ban on AI models developed by PRC-affiliated entities. The company singled out Chinese AI lab DeepSeek, labeling it as “state-controlled” and raising concerns over security risks and potential intellectual property theft.

OpenAI’s Attempt to Kill the Competition?

The proposal has sparked debate over protectionism, global fairness in AI development, and the ethical implications of using intellectual property in AI training. OpenAI urged the U.S. government to consider banning AI models from PRC-backed entities. The move has stirred debates around protectionism, intellectual property, and global fairness in AI development.

“In advancing democratic AI, America is competing with a CCP determined to become the global leader by 2030. That’s why the recent release of DeepSeek’s R1 model is so noteworthy—not because of its capabilities (R1’s reasoning capabilities, albeit impressive, are at best on par with several US models), but as a gauge of the state of this competition.”

What’s in OpenAI’s Proposal?

The 15-page proposal was part of the White House’s call for public input on the AI Action Plan. The company argues that DeepSeek’s models, including its R1 “reasoning” model, are vulnerable to privacy and security risks. The concern? DeepSeek operates under Chinese laws that could compel it to share user data with the government. OpenAI believes banning “PRC-produced” models in countries classified as “Tier 1” under current export rules would mitigate these risks and help prevent intellectual property theft.

“And because DeepSeek is simultaneously state-subsidized, state-controlled, and freely available, the cost to its users is their privacy and security, as DeepSeek faces requirements under Chinese law to comply with demands for user data and uses it to train more capable systems for the CCP’s use. Their models also more willingly generate how-to’s for illicit and harmful activities such as identity fraud and intellectual property theft, a reflection of how the CCP views violations of American IP rights as a feature, not a flaw”

But the proposal didn’t stop there. OpenAI voiced concerns about China’s “unfettered access to data,” warning that the U.S. could lose the AI race without fair use copyright laws. The company also criticized the surge of 781 state-level AI bills introduced this year, arguing that these could stifle American innovation and weaken the U.S.’s position against China’s AI ambitions.

OpenAI is pushing for more than just restrictions. The proposal also advocates for increased infrastructure investment, copyright reform, and greater access to government datasets for AI development.

The Closed vs. Open Source Debate

One aspect that has fueled criticism is OpenAI’s closed-source approach. While OpenAI keeps its models proprietary, it is actively calling for restrictions against open-source models like DeepSeek. This contrast hasn’t gone unnoticed. Critics argue that OpenAI is seeking to curb competition by labeling rivals as security threats, while its own closed-source stance faces backlash for limiting transparency and innovation.

DeepSeek, by contrast, offers open-source models, allowing broader access for developers and researchers. The irony of OpenAI’s position has raised questions about whether the push for regulatory action is motivated by genuine security concerns or a desire to eliminate competition.

DeepSeek’s Rising Influence

DeepSeek isn’t just another AI model—it made headlines in January after DeepSeek surpassed ChatGPT on the App Store, sending shockwaves through tech stocks. The buzz around DeepSeek started in December after its V3 model outperformed top US AI models, including Meta’s Llama 3.1, OpenAI’s GPT-4o, and Alibaba’s Qwen 2.5 on third-party benchmarks—all at a significantly lower cost.

Some speculate that OpenAI’s aggressive stance stems from fear of being outpaced by a leaner, faster-moving competitor. DeepSeek operates with just 160 employees compared to OpenAI’s 2,000+, yet it’s been making significant strides.

Deepening the Rift with DeepSeek

OpenAI has previously accused DeepSeek of “distilling” knowledge from its models, violating terms of service. But labeling DeepSeek as PRC-backed is a notable escalation.

What isn’t entirely clear is whether OpenAI’s concerns target DeepSeek’s API, its open models, or both. DeepSeek’s open models don’t include mechanisms that would allow the Chinese government to extract user data. In fact, companies like Microsoft, Perplexity, and Amazon host these models on their infrastructure.

DeepSeek Pushes Back

DeepSeek’s ties to the Chinese government are murky. The company started as a spin-off from High-Flyer, a quantitative hedge fund. While there’s no hard evidence linking DeepSeek directly to the Chinese government, its founder Liang Wenfeng did meet with Chinese leader Xi Jinping a few weeks ago—a detail that has sparked more scrutiny.

Wenfeng has been vocal about DeepSeek’s independence, distancing the company from China’s Big Tech and VC money. He insists the lab is lean, mission-focused, and not driven by commercial pressures.

“The founder is wealthy and committed enough to keep it lean in a Navy Seal-style for his pursuit of AGI.”

Wenfeng emphasized that the company isn’t focused on monetization but rather on breakthroughs in AI.

“We are in the early stage of a revolution. Companies should focus on breakthroughs instead of monetization.”

Why It Matters

OpenAI’s call to ban Chinese open-source AI models like DeepSeek comes as it continues to defend its own closed-source approach. Critics have pointed out the irony: advocating for regulatory exemptions while pushing for restrictions on open-source rivals.

The move raises broader questions about global competition, intellectual property rights, and the balance between national security and open innovation. With its $500 billion Stargate Project and growing influence in Washington, OpenAI isn’t just shaping the future of AI development but also the rules that govern it.