South Korea has suspended new downloads of DeepSeek, and it was were right to do so.

Chinese tech firms operate under the shadow of state influence, misusing data for surveillance and geopolitical advantage. Any country that values its data and sovereignty must watch this national security threat and take note of South Korea’s response.

Every AI tool captures vast amounts of data, but DeepSeek collects data unnecessary to its function as a simple chatbot. The company was caught over-collecting personal data and failed to be transparent about where that data was going. This typifies China’s lack of transparency about data collection, usage and storage.

South Korea’s National Intelligence Service flagged the chatbot for logging keystrokes and chat interactions, which were all stored on Chinese-controlled servers.

Once data enters China’s jurisdiction, it’s fair game for Beijing’s intelligence agencies. That’s not paranoia; it’s the law. Chinese companies must hand over data to the government upon request. South Korea saw the writing on the wall and acted before it was too late.

Data in the wrong hands can be weaponised. By cross-referencing DeepSeek’s collected data with other stolen datasets, Chinese intelligence agencies could build profiles on foreign officials, business leaders, journalists and dissidents. Keystroke tracking could help to identify individuals even when they use anonymous communication platforms. AI-powered analysis could pinpoint behavioral patterns, making it easier to manipulate public opinion or even blackmail individuals with compromising data.

If this sounds familiar, you’re not mistaken. Huawei was banned from operating 5G networks in multiple countries based on similar concerns. TikTok has come under scrutiny for its ties to the Chinese government. China has spent years perfecting cyber-espionage and DeepSeek appears to be the latest tool in its arsenal, joining the growing list of Chinese tech products raising red flags.

Chinese actors have displayed a pattern of digital intrusion. Recent events include the Volt Typhoon and Salt Typhoon operations, which targeted US digital infrastructure and telecom networks. These attacks compromised the data of more than one million people, including government officials. Looking to Europe, Germany fell victim to Chinese-backed hackers breaching its federal cartography agency.

China is using AI tools for influence, data gathering and geopolitical maneuvering. AI is a versatile tool through which the flow of information is controlled.

The risk goes far beyond espionage. It extends to economic coercion and intellectual property theft. For example, multinational companies relying on AI-powered tools may unknowingly send sensitive business strategies to foreign adversaries. Government agencies may unknowingly feed points of information that would be classified in aggregate into an AI system that Beijing can tap into. The consequences would be far-reaching and deeply troubling.

What if South Korea had looked the other way? Millions of South Korean citizens would have been at risk of Chinese coercion and exposed to data harvesting under the guise of harmless AI. In an era where data shapes power, handing control to foreign entities is dangerous.

Some countries are beginning to grasp these threats. India and Australia are ramping up scrutiny of foreign AI applications, and Australia and Taiwan have banned DeepSeek on government devices. The European Union is tightening regulations to demand transparency and accountability for data usage.

The United States, on the other hand, is still deliberating. President Donald Trump has focused on AI as a push for Silicon Valley to lift its game, rather than considering the technology’s national security implications. US lawmakers are beginning to propose restrictions on AI tools linked to foreign adversaries. For Texan officials and US navy personnel, for example, DeepSeek has been banned due to its links to the Chinese government.

However, regulatory action has been slow to gain traction, caught in a web of political disagreements and lobbying pressures. Meanwhile, security agencies warn that inaction could leave critical infrastructure and government institutions vulnerable to AI-driven espionage. Without decisive policies, the US risks becoming not only a prime target for data manipulation and intelligence gathering, but a soft target. It must act to prevent another major data breach, before it finds itself reacting to one. Waiting is not an option.

China’s AI ambitions aren’t slowing down, and global vigilance must not flag. The battle for digital sovereignty is already underway, and governments that hesitate will find themselves at a disadvantage from both economic and security standpoints.

Act now or pay later. AI is the new frontier of global competition, and data is the ultimate weapon. Those who don’t secure it will face the consequences. South Korea made the right move—who’s next?

The release of the Chinese DeepSeek-R1 large language model, with its impressive capabilities and low development cost, shocked financial markets and led to claims of a ‘Sputnik moment’ in artificial intelligence. But a powerful, innovative Chinese model achieving parity with US products should come as no surprise. It is the predictable result of a major US and Western policy failure, for which the AI industry itself bears much of the blame.

China’s growing AI capabilities were well known to the AI research community, and even to the interested public. After all, Chinese AI researchers and companies have been remarkably open about their progress, publishing papers, open-sourcing their software and speaking with US researchers and journalists. A New York Times article from last July was headlined, ‘China Is Closing the AI Gap with the United States’.

Two factors explain China’s achievement of near parity. First, China has an aggressive, coherent national policy to reach self-sufficiency and technical superiority across the entire digital technology stack, from semiconductor capital equipment and AI processors to hardware products and AI models—and in both commercial and military applications. Second, US (and EU) government policies and industry behavior have exhibited a depressing combination of complacency, incompetence and greed.

It should be obvious that Chinese President Xi Jinping and Russian President Vladimir Putin are no friends of the West and that AI will drive enormously consequential economic and military transformations. Given the stakes involved, maintaining AI leadership within democratic advanced economies justifies, and even demands, an enormous public-private strategic mobilisation on the scale of the Manhattan Project, NATO, various energy-independence efforts, or nuclear-weapons policies. Yet the West is doing the opposite.

In the US, government and academic research in AI are falling behind both China and the private sector. Owing to inadequate funding, neither government agencies nor universities can compete with the salaries and computing facilities offered by the likes of Google, Meta, OpenAI, or their Chinese counterparts. Moreover, US immigration policy toward graduate students and researchers is self-defeating and nonsensical, because it forces highly talented people to leave the country at the end of their studies.

Then there is the US policy on regulating Chinese access to AI-related technology. Export controls have been slow to appear, wholly inadequate, poorly staffed, easily evaded, and under-enforced. Chinese access to US AI technologies through services and licensing agreements has remained nearly unregulated, even when the underlying technologies, such as Nvidia processors, are themselves subject to export controls. The US announced stricter licensing rules just a week before former President Joe Biden left office.

Finally, US policy ignores the fact that AI R&D must be strongly supported, used, and, where necessary, regulated throughout the private sector, the government, and the military. The US still has no AI or IT equivalent of the Department of Energy, the National Institutes of Health, NASA, or the national laboratories that conduct (and tightly control) US nuclear-weapons R&D.

This situation is partly the result of sclerotic government bureaucracies in both the European Union and the US. The EU technology sector is severely overregulated, and the US Departments of Defense and Commerce, among other agencies, need reform.

Here, the tech industry is somewhat justified in criticising their governments. But the industry itself is not blameless: over time, lobbying efforts and revolving-door personnel appointments have weakened the capabilities of critically important public institutions. Many of the problems with US policy reflect the industry’s own resistance or neglect. In critical ways, it has been its own worst enemy, as well as the enemy of the West’s long-term security.

For example, ASML (the Dutch maker of state-of-the-art lithography machines used in chip manufacturing) and the US-based semiconductor-equipment supplier Applied Materials both lobbied to weaken export controls on semiconductor capital equipment, thus assisting China in its effort to displace TSMC, Nvidia and Intel. Not to be outdone, Nvidia designed special chips for the Chinese market that performed just slightly below the threshold set by export restrictions; these were then used to train DeepSeek-R1. And at the level of AI models, Meta and the venture capital firm Andreessen Horowitz have lobbied fiercely to prevent any limits on open-source products.

At least in public, the industry’s line has been: ‘the government is hopeless, but if you leave us alone, everything will be fine’. Yet things are not fine. China has nearly caught up with the US, and it is already ahead of Europe. Moreover, the US government is not hopeless, and must be enlisted to help. Historically, federal and academic research and development compare very favourably with private-sector efforts.

The internet, after all, was pioneered by the US Advanced Research Projects Agency (now DARPA), and the World Wide Web emerged from the European Organisation for Nuclear Research. Netscape co-founder Marc Andreessen created the first web browser at a federally funded supercomputer center within a public university. Meanwhile, private industry gave us online services such as CompuServe, Prodigy and AOL—centralised, closed, mutually incompatible walled gardens that were justly obliterated when the internet was opened to commercial use.

The challenges of AI research and development and China’s rise require a forceful, serious response. Where government capacity falls short, we need to bolster it; not destroy it. We need to pay competitive salaries for government and academic work; modernise US (and EU) technology infrastructure and procedures; create robust research and development capacity within the government, particularly for military applications; strengthen academic research; and implement rational policies for immigration, AI research and development funding, safety testing and export controls.

The one truly difficult policy problem is openness, particularly open-source licensing. We cannot let everyone have access to models optimised for hunter-killer drone attacks; nor, however, can we stamp ‘top secret’ on every model. We need to find a pragmatic middle ground, perhaps relying on national defence research laboratories and carefully crafted export controls for intermediate cases. Above all, we need the AI industry to realise that if we don’t hang together, we will hang separately.