Microsoft Corp. and OpenAI are currently investigating whether a group linked to Chinese artificial intelligence startup DeepSeek gained unauthorised access to data generated by OpenAI’s technology, according to sources familiar with the situation.
Microsoft’s security researchers reportedly observed activity in the autumn indicating that individuals potentially connected to DeepSeek were extracting a significant volume of data through OpenAI’s application programming interface (API). The sources, who spoke on condition of anonymity due to the sensitive nature of the matter, stated that this activity raised concerns over possible violations of OpenAI’s terms of service or attempts to bypass restrictions on data usage.
Concerns over data extraction
Developers can license OpenAI’s API to integrate its advanced AI models into their own applications, but improper use of the system could lead to the unauthorised acquisition of proprietary data. Microsoft, which is both OpenAI’s largest investor and a key technology partner, promptly alerted OpenAI to the issue. The extent of the data extraction, as well as its potential implications, remain unclear.
Neither OpenAI nor DeepSeek has responded to requests for comment, while Microsoft declined to comment on the situation. Hedge fund High-Flyer, where DeepSeek was originally established, also did not respond to inquiries.
DeepSeek’s rise and AI competition
DeepSeek recently made waves in the AI industry by launching R1, an open-source AI model designed to mimic human reasoning. The model has reportedly outperformed several US-developed AI systems, including those from OpenAI, Google, and Meta Platforms Inc., in key industry benchmarks such as mathematical problem-solving and general knowledge assessments.
Notably, DeepSeek claimed that R1 was built at a fraction of the cost incurred by its US competitors. This development sent shockwaves through the AI industry, leading to a significant market shake-up. On Monday, major AI-linked technology stocks, including those of Microsoft, Nvidia Corp., Oracle Corp., and Google’s parent company, Alphabet Inc., suffered heavy losses. The combined market value of these firms plunged by nearly $1 trillion.
US government weighs In
The allegations have drawn attention from US government officials, with David Sacks, President Donald Trump’s AI czar, raising concerns over DeepSeek’s potential use of OpenAI’s model outputs to develop its own technology. Speaking to Fox News, Sacks highlighted a technique known as “distillation,” in which an AI model is trained using the outputs of another model to develop similar capabilities.
“There’s substantial evidence that what DeepSeek did here is they distilled knowledge out of OpenAI models, and I don’t think OpenAI is very happy about this,” Sacks stated, though he did not provide specific details of the evidence supporting his claim.
OpenAI’s response
In response to Sacks’ comments, OpenAI issued a statement acknowledging ongoing threats from foreign companies attempting to replicate the models developed by leading US AI firms.
“We know PRC-based companies—and others—are constantly trying to distill the models of leading US AI companies,” an OpenAI spokesperson said, referring to the People’s Republic of China. “As the leading builder of AI, we engage in countermeasures to protect our IP, including a careful process for determining which frontier capabilities to include in released models.”
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OpenAI further emphasised the importance of collaborating with the US government to safeguard its most advanced AI models from being exploited by foreign adversaries and competitors.
Implications for AI regulation and national security
The allegations surrounding DeepSeek’s potential unauthorised use of OpenAI data raise significant questions about AI security, intellectual property protection, and the broader geopolitical competition in artificial intelligence development. With China rapidly advancing in AI research and development, US companies and government agencies are increasingly focused on securing their technological edge.
The US has already imposed restrictions on the export of high-end AI chips to China, citing national security concerns. If DeepSeek is found to have improperly accessed OpenAI’s data, it could prompt further scrutiny and regulatory action against foreign AI firms suspected of benefiting from US-developed AI technologies.
As Microsoft and OpenAI continue their investigation, the case could have wide-ranging implications for how AI firms protect their intellectual property in an era of intensifying global AI competition.
