DeepSeek: How a Chinese startup has made a profound impact on the AI industry

When DeepSeek app took first place in the US App Store in January 2025, surpassing ChatGPT, few in the Western world realized how significant that moment was. Today, it’s important to understand who is behind this breakthrough and why DeepSeek has become the main topic of discussions about the future of artificial intelligence.

From Idea to Revolution: The Rapid Rise of DeepSeek-R1

DeepSeek is a Chinese company founded in May 2023 by Liang Wenfeng, co-founder of the well-known hedge fund High-Flyer. Based in Hangzhou, the company chose an ambitious path from the start: to develop open large language models (LLMs) that anyone can use.

It took only a year and a half for the company to release its flagship product — a chatbot based on the DeepSeek-R1 model for iOS and Android. By the end of January 2025, the app became the most downloaded free app in the American App Store, overtaking the long-standing leader ChatGPT. This was not just a milestone for the tech community — it was a signal that the AI market is changing.

Open Technology as a Competitive Advantage

Unlike many competitors who keep their models under lock and key, DeepSeek chose a radically different approach. The company makes its generative AI algorithms, trained models, and training details fully open — anyone can freely use, modify, and study their code.

This strategy attracted a wave of young AI researchers from top Chinese universities and specialists from related fields, who saw the opportunity not just to work on cutting-edge technology but to influence its development. Openness became DeepSeek’s main trump card in the fight for talent and trust within the scientific community.

Market Shift: How DeepSeek Changed Pricing Rules

DeepSeek’s success had an unexpected side effect: prices for AI models in China began to plummet rapidly. Giants like ByteDance, Tencent, Baidu, and Alibaba had to urgently lower their prices for AI solutions to stay competitive.

The paradox was that DeepSeek remained profitable — while its competitors suffered losses from the price war they were forced to engage in. This raised a logical question: how do these companies make their models more efficient and cost-effective, and why can’t others replicate this trick?

Strategy of Avoiding Commercialization

DeepSeek deliberately focused on pure research and avoided detailed plans for commercializing its developments. This approach allowed the company to sidestep the strictest Chinese AI regulations, remaining in a relatively safe environment for innovation. While many companies balance between innovation and regulatory restrictions, DeepSeek chose the path of least resistance.

Significance for Asian Technologies and Talent Retention

On a broader level, DeepSeek’s success is seen as a significant step forward in high-tech development in the Asian region. The company helps retain top talent in China and neighboring countries, reducing the “brain drain” that has long been a problem for India and China.

DeepSeek has demonstrated that innovative companies can emerge not only in Silicon Valley but also in other parts of the world — provided they have the right strategy, openness to collaboration, and understanding of local advantages. This could very well reshape the geography of AI development in the coming years.