The Truth Behind DeepSeek
The 404 Media Podcast | Released on January 29, 2025

In this episode of The 404 Media Podcast, hosts Joseph, Emmanuel Mayberg, Jason Kebler, and Sam delve into the seismic impact of DeepSeek on the AI industry. DeepSeek, an advanced AI model developed by a Chinese company of the same name, has rapidly shaken the foundations of the artificial intelligence landscape, prompting widespread discussion and concern both within and outside the tech community.

Understanding DeepSeek

Emmanuel Mayberg opens the discussion by explaining the origins and capabilities of DeepSeek:

"DeepSeek is an AI model that's developed by a Chinese company of the same name that itself was spun out from a Chinese hedge fund. It released last week and scored very well on the benchmarks, even outperforming OpenAI and Meta's Llama in several areas."
[01:38]

DeepSeek's impressive performance on standard AI benchmarks has fueled excitement and anticipation. As a leading model in the "frontier model space," DeepSeek's ability to surpass established giants like OpenAI and Meta with significantly lower training investments has garnered attention.

Rising Concerns and Market Reactions

The hosts discuss the growing apprehension surrounding DeepSeek's emergence, particularly its implications for the U.S. AI industry:

"The narrative in people's heads is like, China beat the US with less money and old technology. What the fuck is that?"
—Joseph [06:20]

This sentiment reflects broader fears that China's strategic advancements in AI could undermine American technological supremacy. The significant factor exacerbating these fears is DeepSeek's development using outdated chips and a training budget of approximately $5.6 million—a stark contrast to the billions invested by U.S. tech firms.

Susan Ettlinger contributes an illustrative analogy to highlight the perceived disparity:

"It's like the Americans are only getting the PS5s. The Chinese companies can only have PS3, maybe even a PS2. But they made a really sick game for PS3 and PS2. And everybody's like, damn, maybe you just don't need the latest console."
[09:13]

This comparison underscores the shock and disbelief that a Chinese company could achieve superior AI performance with seemingly inferior resources.

Impact on Nvidia and the AI Hardware Race

A significant portion of the conversation centers on Nvidia's role in the AI hardware ecosystem and how DeepSeek's success threatens its dominance:

"Ever since the AI boom took over the world, Nvidia has been the primary... the key designs and chips that are powering this AI revolution."
—Emmanuel [08:08]

DeepSeek's ability to outperform U.S. counterparts using older Nvidia chips has led to a dramatic decline in Nvidia's stock value, triggering market volatility. This development challenges the prevailing paradigm that superior hardware and massive compute clusters are essential for AI supremacy.

Industry Leaders Weigh In

Marc Andreessen, co-founder of Andreessen Horowitz (a16z), likens DeepSeek's emergence to a pivotal historical moment:

"Think it's to be seen if he's correct, but I totally understand the sentiment. He called it AI's Sputnik moment."
—Emmanuel [10:02]

Referencing the 1957 launch of Sputnik, Andreessen emphasizes that DeepSeek serves as a wake-up call for American AI firms, highlighting vulnerabilities in the current strategy of racing for larger and more advanced chip clusters.

Censorship and Ethical Implications

The discussion shifts to the ethical dimensions of AI model development, comparing DeepSeek's censorship practices with those of ChatGPT:

"The argument is that if we accept OpenAI's censorship based on their ideology, should another country create a dominant AI model with its own cultural restrictions?"
—Emmanuel [13:15]

Susan Ettlinger raises concerns about the broader implications of accepting AI models constrained by specific cultural or political agendas:

"Facebook does bad things, TikTok does bad things. We are more willing to accept the bad things that Facebook does because it's our social media company as opposed to the Chinese social media company."
[09:16]

The ability to modify DeepSeek's open-weight model allows users to bypass certain restrictions, leading to debates about information control and the potential for AI to propagate specific ideological viewpoints.

Technical Insights and Future Outlook

Emmanuel Mayberg provides a nuanced perspective on the future trajectory of the AI industry amidst these developments:

"AI is moving at the pace of scientific discovery and is developing at a rate that is very hard to predict... I am doubtful that this [market fluctuation] will hold. Nvidia is still the dominant hardware player in this space."
—Emmanuel [18:21]

He speculates that while DeepSeek's current success poses challenges, U.S. tech giants like Nvidia, Meta, and Google are likely to counteract by innovating and improving efficiency. The competitive nature of the AI race suggests that the market may stabilize as American companies adapt to maintain their leadership.

Conclusion

The episode concludes with reflections on the emotional and unpredictable nature of AI advancements juxtaposed against market reactions:

"AI is moving at the pace of scientific discovery and the markets are moving emotionally."
—Emmanuel [18:21]

As DeepSeek continues to make waves, The 404 Media Podcast underscores the necessity for the U.S. to bolster its AI research, talent acquisition, and hardware capabilities to stay competitive in this rapidly evolving field.

Notable Quotes:

• Joseph on market panic:
  "China beat the US with less money and old technology. What the fuck is that?"
  [06:20]

• Susan Ettlinger on censorship analogies:
  "Facebook does bad things, TikTok does bad things... we are more willing to accept the bad things that Facebook does because it's our social media company as opposed to the Chinese social media company."
  [09:16]

• Emmanuel Mayberg on AI's unpredictable pace:
  "AI is moving at the pace of scientific discovery and is developing at a rate that is very hard to predict..."
  [18:21]

This comprehensive discussion provides listeners with an in-depth understanding of DeepSeek's implications for the AI industry, highlighting the intersection of technology, market dynamics, and geopolitical tensions.