Chinese AI research firm DeepSeek has launched its open-source AI model, DeepSeek-R1, promising breakthroughs in mathematical reasoning, code generation, and operational cost-efficiency. The development has positioned the company as a significant competitor to giants like OpenAI. However, there is a major data security-related catch here. On its privacy policy page, the company has explicitly said that all data it collects will be stored in China and can retain the information for as long as it needs.
Before we get into that, let’s quickly see how DeepSeek shook up global trades.
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DeepSeek Disrupts Global Market
The release of DeepSeek-R1 sent shockwaves through global financial markets, particularly in the United States. Nvidia, the chip-making titan led by Jensen Huang, experienced an unprecedented market value loss of $593 billion, marking a historic 17 per cent drop in a single day.
The Nasdaq also plunged over 3 per cent, while the S&P 500 took a hit amid investor concerns about the rising dominance of more affordable Chinese AI solutions.
Expert Warnings On Security Risks
Cybersecurity expert Adrianus Warmenhoven from NordVPN highlighted both the potential and risks associated with AI advancements. He stressed the importance of caution, stating:
“The emergence of startups like DeepSeek presents both opportunities and security concerns for users. It is critical to approach interactions with such platforms with a degree of caution, especially given the data privacy laws that vary significantly from one jurisdiction to another.”
Warmenhoven also raised concerns over China’s stringent regulatory environment, which could pose risks around data collection, storage, and usage. He emphasised that users should carefully consider the implications of sharing data with AI models and the potential for misuse.
Deep Dive Into DeepSeek’s Privacy Policy
What Data Does It Collect?
DeepSeek’s privacy policy reveals extensive data collection practices. The company gathers information users provide, including account details, chat history, and uploaded files.
More concerning is the automatic collection of sensitive data, such as IP addresses, device identifiers, and network information.
You can check out further details in the screenshot below:
Since there is potential for user data to be exploited in AI model training, users must exercise caution when accessing DeepSeek, particularly on corporate or sensitive networks.
Where Does DeepSeek Store Data?
DeepSeek stores user data on secure servers in the People’s Republic of China, raising questions about compliance with international data protection laws.
The company retains information for as long as necessary for its services, including legal and security obligations.
Take a look at what the company has to say:
Given these factors, experts recommend a careful approach to using DeepSeek, particularly for professional or sensitive activities, as the platform’s data practices remain under scrutiny.
