Khan’s DeepSeek Answer Doesn’t Compute

February 5, 2025

Is DeepSeek the result of American AI being too consolidated? Lina Khan makes the case in today’s New York Times that the Chinese AI upstart’s disruption of America’s largest firms is a “canary in the coal mine.” DeepSeek is telling us that our businesses are plagued by the sluggish, bureaucratic, inertial habits of American big tech “monopolies.”

The comeuppance of big U.S. tech giants Google and Nvidia by a lithe, agile Chinese upstart in the AI market is easily spun as a consequence of too much business consolidation in the United States. That is why, Khan said, America can be “challenged on the cheap.”

There is a lot yet to be learned about this upstart. Was DeepSeek really as thinly financed – at a tiny fraction of the AI budgets of big American tech companies – or did it receive backdoor financing from Beijing? Let’s suppose, for the sake of argument, that it is the case that DeepSeek is what it appears to be. Let us further suppose that DeepSeek’s demonstration of the use of “good enough” export compliant chips from Nvidia, sharpening of the product by open source scrutiny, and its more discriminating use of data turns out to be the superior solution.

Khan’s argument still doesn’t hold water.

It would be hard to find a large-scale sector that is more competitive than the American companies preparing to beat each other to death with AI. Competitors include Nvidia, Google, Microsoft, Open AI, Apple, Meta, Amazon and IBM, to name a few. There are innumerable smaller players nipping at their heels. Does that sound consolidated to you? This is a technology landscape in which Godzilla, King Kong, Mothra, Mechagodzilla, and Rodan are fighting to the death.

Khan quotes Marc Andreessen that DeepSeek is “AI’s Sputnik moment.” It may be that Americans were too laser-focused on scale and not focused enough on the creative potential of being forced to do more with less. It was a good thing that Sputnik and the first man in space, Yuri Gagarin, spurred America to get more serious about the space race and STEM education. But remember, we were the ones who went to the Moon.