ANGELA HUYUE ZHANG
In 1957, the Soviet Union launched the world’s first artificial satellite into orbit, sparking fears in the United States that, unless it took radical action to accelerate innovation, its Cold War adversary would leave it in the technological dust. Now, the Chinese startup DeepSeek has built an artificial intelligence model that it claims can outperform industry-leading American competitors, at a fraction of the cost, leading some commentators to proclaim that another “Sputnik moment” has arrived.
But the focus on the US-China geopolitical rivalry misses the point. Rather than viewing DeepSeek as a stand-in for China, and established industry leaders (such as OpenAI, Meta, and Anthropic) as representatives of the US, we should see this as a case of an ingenious startup emerging to challenge oligopolistic incumbents – a dynamic that is typically welcomed in open markets.
DeepSeek has proved that software ingenuity can compensate, at least partly, for hardware deficiencies. Its achievement raises an uncomfortable question: Why haven’t leading US industry leaders achieved similar breakthroughs? Nobel laureate economist Daron Acemoglu points the finger at groupthink, which he says prevented Silicon Valley incumbents from adequately considering alternative approaches. He might have a point, but it is only half the story.
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