WSJ Tech News Briefing: Detailed Summary of "DeepSeek Resists Bringing on Investors"

Release Date: March 17, 2025
Host: Shara Tipkin
Publisher: The Wall Street Journal

Overview

In this episode of the WSJ Tech News Briefing, host Shara Tipkin delves into two significant topics shaping the tech and bioscience landscapes: the impact of federal funding cuts on U.S. bioscience and drug development, and the cautious stance of Chinese AI startup DeepSeek towards external investments despite its burgeoning popularity. The episode features insightful discussions with The Wall Street Journal’s Enterprise Technology Group bureau chief Stephen Rosenbush and reporter Rebecca Fung, providing listeners with a comprehensive understanding of these critical issues.

1. Federal Funding Cuts Threaten U.S. Bioscience and Drug Development

a. Context of Funding Cuts

The episode opens with an examination of the Trump administration's initiative to reduce federal spending, which includes significant cuts to bioscience funding. These cuts are primarily affecting grants that universities depend on for conducting vital research.

b. Insights from Stephen Rosenbush

Stephen Rosenbush provides an in-depth analysis of how these funding reductions are reshaping the bioscience sector:

• Funding Mechanism and Dependency: "One of their chief investigators, David Baker, won a Nobel Prize for his work last year designing proteins not found in nature. This group relies on the government for around 90% of its funding." (01:30)

• Impact on Universities: "They are cutting back. The uncertainty in funding has led to a significant reduction in the number of graduate students that the University of Washington is admitting in biochemistry and elsewhere." (02:12)

• Administrative Responses: Universities are implementing broad-based hiring freezes and reducing faculty positions to cope with the uncertain financial landscape.

c. Broader Implications

Rosenbush highlights the long-term risks associated with sustained funding uncertainty:

• Economic and Scientific Consequences: "The concern that David Baker in particular has is that there really isn't that much actual cost savings to be found in terms of hard dollars. But the cost of those savings could be very, very significant to the US over time." (03:32)

• Global Competitiveness: "We could end up buying more of these products and drugs from China, which has invested very, very heavily in this scientific work over the last 15 years and which also critically has a really stable funding base." (04:21)

d. Government Response

When questioned about the administration's stance, Rosenbush notes a lack of direct communication: "I did reach out to the National Institutes of Health and to the White House. I haven't heard anything back." (02:57)

Summary of Section 1

The federal funding cuts initiated by the Trump administration are creating significant uncertainty within the U.S. bioscience community. This financial strain is leading to reduced graduate admissions, hiring freezes, and potential long-term setbacks in drug development and scientific innovation, potentially ceding leadership to countries like China with more stable funding environments.

2. DeepSeek's Popularity vs. Reluctance to Accept Investments

a. Rise of DeepSeek

DeepSeek, a Chinese AI startup, has garnered substantial attention for its advanced and cost-effective chatbot. Despite its success and the influx of investor interest, the company remains hesitant to secure external funding.

b. Interview with Rebecca Fung

Reporter Rebecca Fung provides a comprehensive look into DeepSeek's strategic decisions:

• Founder’s Reluctance: "What we've known is that the founder has basically told his associates that he's really not in a hurry to get any investment, partially because he’s slightly afraid that outsiders like external investors would basically interfere with Deep Seek's decisions." (06:16)

• Desire for Autonomy: The founder, Liang Wenfeng, prefers to maintain control within the top tiers of the company to preserve its strategic direction and global aspirations.

• Funding History: "Deepseek has an interesting starting story. Basically it started as a Quant Fund in 2015... they're basically using the quant fund's revenue to fund their AI ambition." (07:37)

c. Potential Investors and Partnerships

Despite reluctance, various entities show interest in DeepSeek:

• Investment Groups: Venture capital and private equity funds are keen to invest, alongside state-linked funds.

• Tech Giants Partnerships: Executives from Tencent and Alibaba have engaged with DeepSeek to integrate its AI capabilities into their platforms. For example, Tencent is testing DeepSeek's chatbot on its WeChat app without incurring licensing fees, leveraging DeepSeek's open-source algorithms. (08:30)

• Public Acknowledgment: Collaborations with major tech firms like Tencent and Alibaba are openly discussed, boosting DeepSeek's market presence. (09:40)

d. Challenges Facing DeepSeek

Despite its popularity, DeepSeek encounters several obstacles:

• Technical Strain: "Deepseek's chatbot itself is a bit overwhelmed... it's overwhelmed by millions of users because its computing power is proven at the moment not to be enough." (10:26)

• Regulatory Pressures: Global authorities are imposing restrictions on DeepSeek's chatbot usage due to data security concerns, complicating its expansion and operational stability.

e. Future Prospects

The company's future hinges on its decision to monetize:

• Monetization Dilemma: "It's really up to Deepseek whether they want to stay in almost like a nonprofit form and open source or they want to monetize it." (10:59)

• Investor Hesitation: Without a clear monetization strategy, potential investors remain hesitant, questioning the return on investment. (10:56)

Summary of Section 2

DeepSeek stands at a crossroads between maintaining autonomy and pursuing growth through external investments. While partnerships with tech giants like Tencent and Alibaba highlight its industry significance, technical challenges and regulatory pressures pose significant hurdles. The founder's preference to keep control within the company limits investor interest, creating a delicate balance between sustaining innovation and scaling operations.

Conclusion

This episode of the WSJ Tech News Briefing underscores critical developments in both the bioscience and artificial intelligence sectors. The U.S. faces potential setbacks in bioscience due to federal funding cuts, threatening its global leadership in drug development. Concurrently, DeepSeek's strategic resistance to external investments amidst rapid growth and operational challenges highlights the complex dynamics between innovation, autonomy, and financial support in the tech industry. These discussions illuminate the broader implications for policy, global competitiveness, and the future trajectory of cutting-edge technologies.

Notable Quotes

• Stephen Rosenbush (01:30): "One of their chief investigators, David Baker, won a Nobel Prize for his work last year designing proteins not found in nature. This group relies on the government for around 90% of its funding."

• Stephen Rosenbush (03:32): "The concern that David Baker in particular has is that there really isn't that much actual cost savings to be found in terms of hard dollars. But the cost of those savings could be very, very significant to the US over time."

• Rebecca Fung (06:16): "The founder has basically told his associates that he's really not in a hurry to get any investment, partially because he’s slightly afraid that outsiders like external investors would basically interfere with Deep Seek's decisions."

• Rebecca Fung (10:59): "It's really up to Deepseek whether they want to stay in almost like a nonprofit form and open source or they want to monetize it."

Produced by Julie Chang, Supervising Producer Kathryn Milsock.