Microsoft and OpenAI Investigate Possible Data Breach Linked to Chinese AI Firm DeepSeek

Microsoft and OpenAI are probing a possible data breach involving Chinese AI startup DeepSeek after detecting suspicious activity linked to OpenAI’s API, according to a Bloomberg report.

Microsoft’s security team identified individuals believed to be associated with DeepSeek extracting large amounts of data from OpenAI’s API—potentially in violation of OpenAI’s terms of service, which impose strict data access limits.

As OpenAI’s largest investor, Microsoft flagged the activity as a potential security risk. While OpenAI has not commented on DeepSeek specifically, a spokesperson reiterated the company’s commitment to working with the U.S. government to safeguard its intellectual property. Microsoft also declined to comment on the ongoing investigation.

DeepSeek’s AI Model Sparks Security and Market Concerns

The controversy comes amid growing concerns over DeepSeek’s new AI model, R1, which has reportedly outperformed U.S. rivals at a fraction of the cost. Its success has shaken investor confidence, contributing to a global tech selloff that wiped out $1 trillion in market value.

David Sacks, an advisor to former U.S. President Donald Trump, claimed on Fox News that DeepSeek may have used a technique called “distillation” to extract knowledge from OpenAI’s models. He warned that U.S. AI firms may take stronger measures to prevent such practices, potentially hindering the progress of competing AI systems.

Despite these concerns, Sacks noted that while DeepSeek is narrowing the gap, the U.S. remains at the forefront of AI innovation.

Global AI Security and Geopolitical Implications

The potential breach raises broader concerns about data security and AI intellectual property protection. OpenAI has previously warned that foreign entities, including Chinese firms, frequently attempt to extract knowledge from U.S.-built AI systems.

Adding to the geopolitical dimension, DeepSeek’s AI model follows China’s censorship guidelines, refusing to answer politically sensitive questions about Tiananmen Square, President Xi Jinping, or Taiwan—unlike OpenAI’s ChatGPT.

The Future of AI Security and Ethical Development

As Microsoft and OpenAI continue their investigation, the findings could have significant implications for AI security and the competitive landscape of global AI development.

With increasing scrutiny on intellectual property protection and ethical AI practices, the outcome of this probe may shape how governments and AI companies navigate the evolving challenges of AI security in an era of rapid innovation.