Microsoft has prohibited its employees from using an AI application developed by the Chinese startup Deepseek.

This decision is based on concerns about data security and potential links to propaganda.

The company also confirmed it does not host Deepseek’s app in its store.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Historic data breaches inform current corporate security policies

Microsoft’s ban on DeepSeek follows a pattern of significant Chinese-linked data breaches that have shaped tech security policies.

The 2015 Anthem breach compromised personal information of 78.8 million Americans, making it one of the largest data breaches in history and leading to federal indictments against Chinese nationals 1.

These sophisticated attacks used techniques like spear-phishing and malware to systematically extract valuable data, with evidence showing the information was exfiltrated to China 2.

Such high-profile incidents have influenced American tech companies to prioritize data security concerns involving China.

Microsoft’s decision reflects how past breaches continue to shape present-day risk assessment, particularly when dealing with applications that could potentially transmit user data overseas.

2️⃣ Cost advantages drive Chinese AI adoption despite security concerns

DeepSeek’s rapid growth demonstrates how price advantages can create market traction even amid security controversies.

The Chinese AI company charges approximately $1.10 per million output tokens compared to OpenAI’s $40, creating a substantial cost incentive for adoption 3.

This pricing advantage has helped DeepSeek gain significant market traction, reportedly reaching 47 million daily active users despite security concerns from U.S. officials 3.

Similarly, DeepSeek reportedly trained its V3 foundation model for just $6 million compared to the estimated $100 million for OpenAI’s GPT-4, highlighting the cost efficiency that makes Chinese AI competitive globally 4.

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