‘Game on’: Tech execs say DeepSeek ramps up China-U.S. competition but won’t hurt OpenAI
Tech bosses largely agree the risk DeepSeek poses to OpenAI remains limited for now.
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The technological advances that Chinese artificial intelligence lab DeepSeek have displayed show the game is on when it comes to U.S.-Sino competition on AI, top tech executives told CNBC.
In a series of interviews at France’s Artificial Intelligence Action Summit, leaders of several major tech companies told CNBC that the emergence of DeepSeek demonstrates that China can’t be counted out as a serious player when it comes to AI innovation.
Last month, DeepSeek shocked global markets with a technical paper saying that one of its new AI models was created with a total training cost of less than $6 million — far less than the billions upon billions of dollars being spent by Big Tech players and Western AI labs such as OpenAI and Anthropic.
Chris Lehane, chief global affairs officer at OpenAI, told CNBC that DeepSeek’s advanced, low-cost model confirms there is a “very real competition between U.S.-led, small D democratic AI and CCP [Chinese Communist Party] China-led autocratic, authoritarian AI.”
Many critics of DeepSeek have pointed to apparent censorship by the model when it comes to sensitive topics. For example, when asked about the 1989 Tiananmen Square massacre, DeepSeek’s AI assistant app responds with: “Sorry, that’s beyond my current scope. Let’s talk about something else.”
“There’s two countries in the world that can build this at scale,” Lehane told CNBC’s Arjun Kharpal on the sidelines of the Paris AI summit Monday. “Imagine if there were only two countries in the world that could build electricity at scale. That’s sort of how you have to think about it.”
“For us, what DeepSeek really reinforces and reaffirms is that there is this very real competition with very real stakes,” Lehane added.
Still, tech bosses largely agreed that even though DeepSeek’s breakthrough shows China being further along in the global AI race than previously thought, the threat it poses to OpenAI remains limited for now.
‘The game is on’
DeepSeek says that its new R1 model, an open-source reasoning model, was able to rival the performance of OpenAI’s own similar o1 model — only using a cheaper, less energy-intensive process.
That led experts to question the prevailing wisdom in the West of the last several years, which is that China is behind the U.S. on AI development because of export restrictions that make it harder for firms in the country to get their hands on more advanced Nvidia graphics processing units, or GPUs.
GPUs are necessary for training and running AI applications because they excel at parallel processing, meaning they can perform multiple calculations simultaneously.
Reid Hoffman, a co-founder of LinkedIn and partner at the venture capital firm Greylock Partners, told CNBC Monday that DeepSeek’s new model is “a big deal in showing that the game is on.”
“The competition is afoot with China,” Hoffman said, adding that DeepSeek’s R1 is “a credible, actionable model.”
Abishur Prakash, founder of strategic advisory firm The Geopolitical Business, told CNBC that DeepSeek shows the West’s understanding of China remains limited.
“America’s assumed place as the technological captain of the world is no longer the acceptable belief,” Prakash told CNBC in a phone interview.
“That is the new status quo now, that the space between the U.S. and China has narrowed almost overnight — but it hasn’t narrowed overnight, it’s been years of progress,” Prakash said.
“If there’s one takeaway for the West, it’s that their understanding of China is incredibly limited — and we don’t know what’s coming next,” he added.
No meaningful threat to U.S. AI — yet
Still, leading AI execs aren’t convinced that DeepSeek poses any sort of meaningful risks to the businesses of AI labs like OpenAI and Anthropic just yet.
While experts on the whole agree DeepSeek’s AI advances have been impressive, doubts have been raised about the startup’s claims about cost.
A report from semiconductor research firm SemiAnalysis last month estimated that DeepSeek’s hardware expenditure is “well higher” than $500 million over the company’s history. DeepSeek was not immediately available for comment when contacted by CNBC.
The report found that DeepSeek’s research and development costs and expenses related to ownership are significant and that generating “synthetic data” for the model to train on would require “considerable amount of compute.”
Some technologists believe that DeepSeek may have been able to achieve such a high level of performance by training its models on larger U.S. AI systems.
This technique, known as “distillation,” involves having more powerful AI models evaluate the quality of answers being generated by a newer model.
It’s a claim that OpenAI itself has alluded to, telling CNBC in a statement last month that it’s reviewing reports that DeepSeek may have “inappropriately” used output data from its models to develop its AI model, a method referred to as “distillation.”
“Most of the market fear around [DeepSeek] is in fact misplaced,” Hoffman told CNBC. “It still requires large models — it was distilled from large models.”
“I think the short answer everyone should take is: game on — but large models still really matter,” he added.
Victor Riparbelli, CEO of AI video platform Synthesia, told CNBC that although DeepSeek challenged the “paradigm that brute force scaling is the only way to kind of build better and better models,” the idea that companies are going to suddenly shift significant amounts of their AI workloads is misguided.
“I still think that when you look at users of these technologies, all the workflows, I think when we look back in three months’ time, I think 0.01% of those is going to be moved to Deepseek from OpenAI and Anthropic,” Riparbelli said.
Meredith Whitaker, president of the Signal Foundation, said DeepSeek’s development doesn’t move the needle much for the industry as market momentum is still broadly in favor of larger AI models. The Signal Foundation is a nonprofit that supports the encrypted messaging app Signal.
“This is not something that’s going to disrupt the concentration of power or the geopolitical balance at this stage,” Whitaker told CNBC. “I think we have to keep our eye on the ball there and recognize that it’s really this ‘bigger is better’ paradigm that is not reduced through efficiency gains historically, that is driving this concentration.”
Vcg | Visual China Group | Getty Images
When ChatGPT launched in 2022, Google was caught flatfooted, but the launch of Gemini 3 and the Ironwood AI chip this month has experts raving about Alphabet’s AI comeback.
Google kicked off November by unveiling Ironwood, the seventh generation of its tensor processing units, or TPUs, that the company says lets customers “run and scale the largest, most data-intensive models in existence.” And last week, Google launched Gemini 3, its latest artificial intelligence model, saying it requires “less prompting” and provides smarter answers than its predecessors.
Salesforce CEO Marc Benioff captured the excitement around Gemini 3 with a Sunday post on X, saying that despite using OpenAI’s ChatGPT daily for three years, he wasn’t going back after two hours of using Gemini 3.
“The leap is insane,” wrote Benioff, whose company has partnerships with Google, OpenAI and other frontier AI model providers. “Everything is sharper and faster. It feels like the world just changed, again.”
Most tech stocks were down to start the week, except for one: Alphabet.
Shares of the Google parent surged more than 5% on Monday, adding to last week’s gain of more than 8%. Warren Buffett’s Berkshire Hathaway revealed earlier this month that it owns a $4.3 billion stake in Alphabet as of the end of the third quarter.
Alphabet shares are up nearly 70% this year and have outperformed Meta’s by more than 50 percentage points this year, and last week, Alphabet’s market cap surpassed Microsoft’s.
All of this came despite Nvidia reporting stronger-than-expect revenue and guidance in its third-quarter earnings last week.
“You may be asking why almost all of the AI stocks we cover are selling off after such good news from Nvidia,” Melius Research analyst Ben Reitzes wrote in a note Monday, referring to Nvidia’s positive third quarter earnings last week. “There is one real reason for worry and it is the ‘AI comeback’ of Alphabet.”
But while Google appears to have regained the edge, its lead over rivals remains razor thin in the gruelingly competitive AI market, experts said.
Sundar Pichai, chief executive officer of Alphabet Inc., during the Bloomberg Tech conference in San Francisco, California, US, on Wednesday, June 4, 2025.
David Paul Morris | Bloomberg | Getty Images
Putting the pieces together
With Gemini 3 and Ironwood, Google CEO Sundar Pichai appears to have finally put the pieces together for the company’s AI offerings, said Michael Nathanson, co-founder of equity research firm Moffett Nathanson. Google is serving a broad range of customers from consumers to enterprise, something the company initially struggled to do after the arrival of ChatGPT.
“Three years ago, they were seen as kind of lost and there were all these hot takes saying they lost their way and Sundar is a failure,” Nathanson said. “Now, they have a huge leg up.”
The company had a number of AI product mishaps in its initial attempts to catch up with OpenAI. In 2024 alone, Google had to pull its image generation product Imagen 2 for several months after users discovered a number of historical inaccuracies. The launch of AI Overviews caused a similar reaction when users discovered it gave faulty advice, which the company later remedied with additional guardrails.
“There was a lot of fumbling, and they were scrambling,” said Gil Luria, managing director at technology research firm DA Davidson. “But they had the tech in the pantry, and it was just a matter of getting it all together and shipped.”
Of particular note is how quickly Google launched Gemini 3 after the spring release of Gemini 2.5, which was already considered an impressive model. The hyper-realistic image generation features of Nano Banana is another notch in Google’s belt. After the company initially launched the image generation tool, Gemini shot to the top of the Apple App Store in September, dethroning ChatGPT.
And after the launch of Gemini 3, Google released Nano Banana Pro last week.
Google’s ownership of YouTube and all the content on the video platform gives the company an edge when it comes to training models for image and video generation.
“The amount of video and current data that Google has, that’s really a huge competitive advantage,” said Mike Gualtieri, vice president and principal analyst for Forrester Research. “I don’t see how OpenAI and Anthropic can overcome that.”
Additionally, Google has successfully incorporated its AI models into its enterprise products, driving sales for the company’s cloud unit. In its third quarter earnings results last month, Google reached its first $100 billion quarter, boosted by its cloud growth. The company’s cloud unit, which houses its AI services, showed solid growth and a $155 billion backlog from customers.
And it’s not just the AI models. Google is also garnering attention with its AI chips.
Google says Ironwood is nearly 30 times more power efficient than its first TPU from 2018. Google’s ASIC chips are emerging as the company’s secret weapon in the AI wars and have helped it notch recent deals worth billions with customers such as Anthropic.
After a report said that Meta could strike a deal with Google to use its TPUs for the social media company’s data centers, Nvidia saw its stock drop 3% on Tuesday, prompting the chipmaker to post a response on social media.
With the rise of Google’s TPUs, Nvidia may no longer have the AI chips market cornered.
“The advantage of having the whole stack is you can optimize your model to work specifically well on a TPU chip and you’re building everything to a more optimally designed,” said Luria.
The company’s ability to serve AI enterprise customers with its TPUs and Google Cloud offerings as well as its incorporation of Gemini 3 throughout its consumer products is driving Wall Street’s enthusiasm.
Experts who spoke with CNBC said the competitive landscape is broader than just one AI winner, but they added that it’s become increasingly expensive for multiple companies to prove success.
Tight competition
Despite these wins, Google is still in fierce competition with other AI companies, experts said.
“Having the state of the art model for a few days doesn’t mean they’ve won to the extent that the stock market is implying,” Luria said, pointing to Anthropic’s new Opus 4.5 model launched Monday.
Earlier this month, OpenAI also announced two updates to its GPT-5 model to make it “warmer by default and more conversational” as well as “more efficient and easier to understand in everyday use,” the company said.
“The frontier models still seem to be neck and neck in some ways,” Forrester Research’s Gualtieri said.
The competitive edge will likely go to the companies willing to spend more money given the expenses of the AI race, experts said. In their earnings reports last month, Alphabet, Meta, Microsoft and Amazon each lifted their guidance for capital expenditures. They collectively expect that number to reach more than $380 billion this year.
“These companies are spending a lot of money assuming there’s gonna be a winner take all when in reality we may end up with frontier models being a commodity and several will be interchangeable,” Luria said.
For Google, maintaining a lead in AI won’t be without challenges.
Company executives told employees earlier this month that Google has to double its serving capacity every six month to meet demand for AI services and run its frontier models, CNBC reported last week.
“The competition in AI infrastructure is the most critical and also the most expensive part of the AI race,” Google Cloud Vice President Amin Vahdat told employees.
Although Google’s in-house TPUs have gotten increased attention as viable alternatives to Nvidia’s Blackwell chips, Nvidia still holds more than 90% of the AI chip market.
In its post on Tuesday, Nvidia pointed out that its chips are more flexible and powerful than ASIC chips, like Google’s Ironwood, which are typically designed for a single company or function.
And despite getting Salesforce’s Benioff to switch to Gemini, Google also has a lot of catching up to do with its consumer chat product, experts said, citing hallucinations and lower user numbers than OpenAI’s.
The Gemini app has 650 million monthly active users and AI Overviews has 2 billion monthly users, Google said last month. OpenAI, by comparison, said in August that ChatGPT hit 700 million users per week.
“Yes, Google has got its act together,” Luria said. “But that doesn’t mean they’ve won.”
WATCH: AI narrative is shifting towards Google with its complete stack, says Plexo Capital’s Lo Toney
The first day of sale of the iPhone 15 smartphone in Mumbai, India, on Sept. 22, 2023.
Dhiraj Singh | Bloomberg | Getty Images
Apple has filed a case in Delhi High Court against the country’s anti-trust body because of how it considers global turnover when calculating penalties.
The iPhone maker, which is among the fastest growing smart phone brands in India, is challenging India’s new antitrust law under which the U.S. company could incur fines of up to $38 billion, according to a report by Reuters.
It added it was “unconstitutional, grossly disproportionate, unjust” for the Competition Commission of India (CCI) to use turnover when calculating penalties.
Apple did not immediately respond to a request for comment from CNBC.
The CCI has been investigating complaints made by an alliance of Indian startups and Tinder-owner Match Group that accuse Apple of “abusive conduct” which forces developers to pay high commissions for in-app purchases.
Apple denied the charges.
The CCI’s final verdict is still pending but it said its “prima facie view [is] that mandatory use of Apple’s IAP for paid apps & in-app purchases restrict the choice available to the app developers to select a payment processing system of their choice”, in an order in December 2021.
Apple recorded its highest-ever quarterly shipments in India of 5 million units in the third quarter of 2025, according to data from IDC.
The company is expected to sell about 15 million iPhones this year in India and could rank among top five smartphone companies there, Navkendar Singh associate vice president with IDC India said on CNBC’s “Inside India” on Nov. 18.
Apple is among the global companies who are diversifying their manufacturing supply chain from China to India. In 2024, Apple exports from India hit a record of $12.8 billion, growing at more than 42% from year ago.
Alibaba announced plans to release a pair of smart glasses powered by its AI models. The Quark AI Glasses are Alibaba’s first foray into the smart glasses product category.
Alibaba
Alibaba‘s artificial intelligence-powered smart glasses went on sale on Thursday as the Chinese tech giant looks to ramp up its focus on consumer AI in an increasingly competitive market.
The Quark AI Glasses, first announced in July, come in two variants — the S1, which starts at 3,799 Chinese yuan ($536) and G1 at 1,899 yuan.
The tech giant has integrated its Qwen AI models — Alibaba’s version of ChatGPT — with the device which also links to its newly-launched Qwen app. This means users can use voice control to get the glasses to carry out tasks.
The lenses of the glasses are effectively screens and the device has a camera built into the frame. The main difference between the S1 and G1 is the display, Alibaba said.
The company said that some of the features include on-the-go translation, AI-generated meeting notes and the ability to ask the virtual assistants questions. Users take pictures of a product using the camera in the lens and then the device will show the price of that product on Taobao, Alibaba’s main shopping app in China.
Alibaba, like other technology companies such as U.S. giant Meta, are betting that smart glasses could be the next big consumer device after the smartphone.
In September, Meta unveiled the $799 Meta Ray-Ban Display glasses, the social media company’s first consumer-ready smart glasses with a built-in display. Users can control the device via hand gestures with a special wristband.
Alibaba’s glasses will initially go on sale in China and compete with domestic rivals, including consumer electronics maker Xiaomi and startup Xreal.
The smart glasses market is still small but growing rapidly. By 2026, shipments of AI glasses are expected to exceed more than 10 million units, doubling from 2025, according to a forecast from Omdia.
For Alibaba, the glasses are its latest play in the consumer AI market as it looks to build on its recent successes. The company’s ChatGPT-style Qwen app got 10 million downloads in the first week of the public beta launch. Meanwhile, Alibaba’s cloud computing business, where it books much of its AI-relate revenue, saw an acceleration of growth in the last quarter.
The Hangzhou, headquartered company is one of the leaders in China’s AI space, and has been investing aggressively in AI alongside rival giants like Baidu and Tencent, and aggressively launching new models.
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