Is DeepSeek really a deep con? A psyop tossed out to shake up the financial markets?
The release of a Chinese-made artificial intelligence engine called DeepSeek sent a bulldozer through Wall Street this week. Rival AI companies lost hundreds of billions of dollars in market value after sell-offs, once the new kid came on the block.
But as Peter Schweizer and Eric Eggers note on this episode of The Drill Down, the timing is suspicious. “This could be a replay of the lab leak back in 2020,” Schweizer says. “We’re going to simply discuss the reality of how this thing unfolded, the claims that were made, the claims that are not true.”
This Chinese AI software deployment cost the United States a trillion dollars in market value yesterday.
Various American-based companies, including Microsoft, Alphabet (Google), and OpenAI have been spending hundreds of billions on AI products, and along comes DeepSeek, which is owned by a Chinese hedge fund, claiming they built DeepSeek for just $5-$6 million.
“Well, it turns out that figure is not accurate,” Schweizer says. DeepSeek excluded costs related to prior research, experiments on architectures, algorithms, or data. “They also excluded the cost of the salaries of their employees and other fixed capital expenditures,” Schweizer says. “The numbers aren’t even accurate themselves.” Little is known about the hedge fund behind it, a company called High-Flyer.
DeepSeek’s surprise announcement came just six days after President Donald Trump had announced a massive plan to spend $500 billion of private sector investment in a project called Stargate, a sort of AI “moonshot.”
“China has a view called ‘disintegration warfare’ that I wrote about in my last book that tries to defeat an enemy without having to fight it,” Schweizer says. “And we know that China lies about all sorts of things – we can’t rely on their financial data or their economic data, for example.”
Schweizer and Eggers both believe the hidden hand of the CCP is involved, after seeing some of the experiments researchers have done using DeepSeek’s chatbot. Eggers says it struggles when asked about “Tank Man,” the name given to the Chinese man who stood in front of tanks as they rolled into Tiananmen Square in 1989 and massacred protesters.
Eggers describes seeing “videos online of it beginning to answer that question where it stops and says, ‘I’m sorry, I’m not capable of doing that.’”
So, is China really catching up to the U.S. in artificial intelligence? Most observers do not believe so, but the Chinese are getting better. Keeping the U.S. in the lead will be, according to Wall Street observer (and past Drill Down guest) Charlie Gasparino “a real test of American exceptionalism.”
The timing is also suspicious because of its proximity to the threatened ban in the U.S. on TikTok, the Chinese social media app.
“It turns out DeepSeek is in negotiations to do joint ventures and joint research with ByteDance, the parent company of TikTok,” Schweizer says. “And what happened after DeepSeek made this announcement? Millions of people started using DeepSeek. So, this could potentially be an end around TikTok.” If TikTok is banned in the U.S. as a national security threat and propaganda organ, the Chinese will shift to using this other company, DeepSeek, to get access to Americans’ data.
Screenshot of a DeepSeek query on data collection for the Chinese government. (Courtesy of Government Accountability Institute)
Eggers asks if this could be China’s revenge strategy against the leverage that Trump thinks he has with tariffs on Chinese goods. “This could be China’s tariff killer,” Schweizer agrees.
But there’s another interesting facet of this news worth thinking about — What are the Big Tech people in the U.S. saying about DeepSeek? Why are some of them playing it up?
Schweizer’s answer is that in a classic example of the “military-industrial complex,” American tech executives want to gin up more grants for artificial intelligence work for the Stargate project from the U.S. government. This tactic hearkens all the way back to the presidential election campaign of 1960, in which the eventual winner, Sen. John F. Kennedy, was successful by claiming (falsely) the U.S. suffered a “missile gap” with the Soviet Union. While it was false, it also generated lots of new funds for defense contractors.
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