China Stole OpenAI Secrets, Experts Say

It reads this way. From Reuters, which quoted a letter to the U.S. House Select Committee on Strategic Competition, “We have observed accounts associated with DeepSeek employees developing methods to circumvent OpenAI’s access restrictions and access models through obfuscated third-party routers and other ways that mask their source.” From Bloomberg, “OpenAI has warned US lawmakers that its Chinese rival DeepSeek is using unfair and increasingly sophisticated methods to extract results from leading US AI models to train the next generation of its breakthrough R1 chatbot, according to a memo reviewed by Bloomberg News.”

The Chinese are gaining an advantage by stealing from US AI leaders. OpenAI said it had started an investigation as part of a partnership with Microsoft (NASDAQ: MSFT | MSFT Price Prediction). It is not the first time the serious issue has been raised. OpenAI expressed similar anxiety in a letter seen by The New York Times late last year.

China has been accused of stealing US tech secrets for years. Sometimes, it uses other methods. The process has been outright piracy. In 2011, Microsoft’s then-CEO, Steve Ballmer, said the company was losing 95% of its potential revenue in China due to theft. That was well into the billions of dollars.

The AI theft gives China a substantial edge. China also does not have to spend months of development to create the most advanced AI technology. No wonder outside observers believe these China’s AI development costs are as much as 80% lower than those in the US. This may also contribute to the conclusion that China needs less powerful chips.

There is a growing worry that AI developed by large or well-funded companies in China will leapfrog that in the US. Some portion of the hundreds of billions of dollars to be invested in US data centers is also at risk. The global dominance of US AI products is facing increasing competition from China. Add to the theft the fact that China has much more electricity to run data centers than the US does. China also does not face the roadblocks posed by federal and local government concerns about data center and AI proliferation.

China could steal its way to becoming more than No.2 in the global AI race.