Share This Article
A groundbreaking artificial intelligence system, DeepSeek AI, has emerged from China, promising to challenge major U.S. players at a fraction of the usual cost, but it has now been blocked by the privacy authority in Italy.
In just days, it surged in app store rankings—but its meteoric rise has now been blocked in Italy due to privacy concerns. What led to this regulatory setback, and what does it mean for AI governance in Europe? Listen to the latest episode of our podcast on the topic below and on Apple Podcasts, Google Podcasts, Spotify, and Audible and read the article below:
The DeepSeek AI Breakthrough and Privacy Debate
The latest player shaking up the AI landscape, DeepSeek AI, claims to rival industry leaders such as OpenAI while significantly cutting costs. The secret behind this innovation? A revolutionary technique called data distillation, which compresses massive datasets into a refined core, allowing for lower computational requirements.
Reports indicate that DeepSeek’s model was trained using less than USD 6 million worth of Nvidia H800 chips, a remarkably low figure compared to traditional AI development costs. Within a week, the DeepSeek app climbed to the top of free downloads in the U.S., drawing global attention. However, privacy concerns soon led to its blockage in Italy, halting its European expansion.
Why Was DeepSeek AI Blocked in Italy?
DeepSeek’s rapid success attracted scrutiny from Euroconsumer, a leading Italian consumer rights group, which filed a complaint with Italy’s Data Protection Authority (Garante per la Protezione dei Dati Personali). The complaint alleges potential violations of the EU General Data Protection Regulation (GDPR).
Key privacy concerns include:
- Data Transfers – Fears that DeepSeek AI is transferring European users’ personal data to China without adequate safeguards. Under Chinese law, government access to private data is often opaque, raising compliance issues under GDPR.
- Privacy Policy Gaps – Allegations that DeepSeek’s privacy policy does not align with European and national data protection regulations.
- Transparency Issues – A lack of clear information about data retention, user rights, and categories of data collected.
- Profiling and Automated Decision-Making – Insufficient disclosure about how DeepSeek uses user data in its AI algorithms.
- Minors’ Data Protection – No clear framework for verifying age or safeguarding minors’ personal information.
In response, the Italian Data Protection Authority has demanded DeepSeek clarify:
- What personal data is collected, from which sources, and for what purposes.
- Whether data is stored in China and whether adequate safeguards exist.
- If personal data is used for AI training, including any web-scraping practices.
DeepSeek was given 20 days to respond, but in the meantime, Italian authorities have blocked the platform in Italy, pending further investigation since appartently DeepSeek responded to the Garante arguing that the GDPR does not apply to its data processing. This response increased the Italian data protection authority’s concerns that led to the issue of an urgent order preventing the processing of personal data of Italian individuals.
The Geopolitical and Market Disruption
DeepSeek’s rise comes amid a heated global AI race. The U.S. government has restricted the sale of advanced chips to China, forcing Chinese AI firms to develop alternative solutions. If DeepSeek’s data distillation technique proves viable, it could disrupt the entire AI industry, reducing reliance on expensive computing resources.
The impact has already been felt in the stock market. Nvidia’s shares dropped 17% on Monday, erasing roughly $600 billion in market value amid concerns that China’s AI advancements could lower dependency on U.S. semiconductor technology.
These developments also raise an important question: Could stricter AI regulations in the U.S. and Europe create a competitive disadvantage, or will they ensure responsible AI development? This is a very hot topic during a moment when President Trump just revoked President Biden’s AI related executive order arguing that deregulation would boost artificial intelligence investments.
Echoes of OpenAI’s Privacy Issues
DeepSeek’s legal troubles in Italy mirror those faced by OpenAI two years ago, when ChatGPT was temporarily blocked due to GDPR violations. That case resulted in a €15 million fine against the company and forced OpenAI to update its privacy policies to comply with European regulations.
Since then, European authorities have only intensified their scrutiny of AI companies, and with the upcoming AI Act, compliance with data protection laws has become more crucial than ever.
The Future of DeepSeek AI and AI Governance
What happens next? Will DeepSeek AI adjust its privacy policies to align with GDPR requirements and regain access to the European market? Or does this case signal a broader enforcement effort targeting AI platforms that fail to comply with data protection laws?
As innovation, regulation, and geopolitics collide, all eyes are on Italy’s decision and its implications for AI development worldwide.
Final Thoughts: Innovation vs. Privacy Regulation
DeepSeek’s case underscores a critical debate: How do we balance AI innovation with privacy compliance? While strict regulations protect users, they also risk stifling AI advancements.
What’s your take? Should privacy laws be stricter to keep AI companies in check, or do they risk slowing down progress? Read more on AI law issues HERE.
