--- title: "AI Companies Tremble as They Realize It’s Easy for Competitors to Steal Their Super-Expensive Work for Pennies on the Dollar" description: "DeepSeek demonstrated that it's possible to create top-tier AI at a tiny fraction of the cost of what outfits like OpenAI have been spending." date: "2025-01-30" modified: "2025-01-30" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor" url: "https://futurism.com/ai-companies-easy-competitors-steal-work" categories: - "Artificial Intelligence" tags: - "ai chatbots" - "generative ai" - "OpenAI" --- # AI Companies Tremble as They Realize It’s Easy for Competitors to Steal Their Super-Expensive Work for Pennies on the Dollar ![DeepSeek demonstrated that it's possible to create top-tier AI at a tiny fraction of the cost of what outfits like OpenAI have been spending.]() *\Image: Futurism\* The meteoric rise of Chinese startup DeepSeek has [rattled Silicon Valley to its core](). The company demonstrated that it's possible to create top-tier AI at a tiny fraction of the cost of what outfits like OpenAI have been spending. By employing some clever tricks, DeepSeek says it squeezed a groundbreaking amount of performance out of a limited number of already obsolete Nvidia chips. The news sent a jolt down Wall Street, [leading to a massive tech selloff]() that wiped out over $1 trillion in market capitalization — not to mention [almost $100 billion in losses for tech billionaires](). DeepSeek's seemingly competent use of "distillation," which is essentially training an AI on the output of another, has caught the attention of the AI industry, as the [*Wall Street Journal* reports](), sending a chill down the spines of tech leaders. The process effectively allows much smaller entities to rapidly train AI models at a tiny fraction of the cost, an awkward development given the ungodly sums that the likes of OpenAI have been pouring into their models. "It’s sort of like if you got a couple of hours to interview Einstein and you walk out being almost as knowledgeable as him in physics," data management company Databricks CEO Ali Ghodsi told the *WSJ*. Before the emergence of DeepSeek, the modus operandi of AI companies had been to maximize the capabilities of AI models by maximizing the computing power behind them, a mind-bogglingly expensive endeavor that culminated in Trump [announcing a half-trillion dollar AI infrastructure deal]() earlier this month. But DeepSeek has demonstrated that smaller and more efficient rivals appear to be able to achieve similar — if not better — results. OpenAI has since attempted to defend itself, [suggesting to the *Financial Times*]() that DeepSeek may have broken its terms of service through distillation. But as experts quickly pointed out, that's a [glaringly hypocritical position to take]() for the Sam Altman-led company, considering its own success was built on indiscriminately stealing other people's work as well. Put simply, there's a chance that OpenAI may have completely lost its edge, leading to plenty of soul-searching among investors. "Is it economically fruitful to be on the cutting edge if it costs eight times as much as the fast follower?" Hanabi Capital general partner Mike Volpi asked the *WSJ*. Meanwhile, Anthropic CEO Dario Amodei attempted to underplay DeepSeek's significance. In a [blog post](), he argued that the startup's AI model "is not a unique breakthrough or something that fundamentally changes the economics" and that it's instead an "expected point on an ongoing cost reduction curve." Whether Anthropic and its competitors will be able to make good on that promise remains to be seen, especially considering researchers are already hard at work trying to replicate DeepSeek's success. And that could be even simpler than one might think, at least in part due to DeepSeek open-sourcing its AI models (unlike the misleadingly-named OpenAI). "The easiest thing to replicate is the distillation process," AI company Hugging Face senior research scientist Lewis Tunstall told the *WSJ*. An AI research team from the University of California also [claimed this week]() that it had reproduced the core technologies of one of DeepSeek's flagship AIs for a mere $30. Instead of issuing a rallying cry to encourage US-based AI companies to keep up, the Trump administration is seemingly looking to place blame on DeepSeek, which bought its Nvidia chips right before the US made their export illegal. "And there’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI models, and I don’t think OpenAI is very happy about this," president Donald Trump's "[crypto czar]()" David Sacks [told *Fox News*]() earlier this week. At least the president himself appears to have received the message. "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution," Trump [said]() during a GOP event in Florida on Monday. In short, some much-needed competition is finally here, tearing the rug from under the likes of OpenAI. Justifying spending tens or hundreds of billions of dollars will likely become increasingly difficult, as investors are encouraged by the emergence of far more efficient — and potentially less environmentally harmful — alternatives. **More on generative AI:** *[OpenAI Hit With Wave of Mockery for Crying That Someone Stole Its Work Without Permission to Build a Competing Product]()* ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()