OpenAI says DeepSeek used its models illegally, and it has evidence to prove it, new report claims

A phone showing the DeepSeek app in front of the Chinese flag

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New report claims OpenAI has detected evidence of distillation by DeepSeek
Move represents a potential breach of intellectual property
Whitehouse AI czar weighs-in on the subject

According to a new article by the Financial Times, OpenAI claims to have evidence that DeepSeek, the Chinese startup that has thrown the US tech market into financial turmoil, used the company's proprietary models to train its own open-source LLM, called R1. This would represent a potential breach of intellectual property, as it goes against the OpenAI terms of service agreement.

In the article the FT writes that a source at OpenAI claims it has evidence of “distillation” occurring, which is a technique used by developers to leapfrog on the work done by larger models to achieve similar results at a much lower cost.

The OpenAI terms of service clearly state that users cannot copy any of its service or “use output to develop models that compete with OpenAI.” David Sacks, the Whitehouse crypto and AI “czar” said in an interview on Fox that there is “substantial evidence” of distillation occurring from DeepSeek.

OpenAI statement

Speaking to TechRadar an OpenAI spokesperson said: "We know PRC based companies – and others – are constantly trying to distill the models of leading US AI companies. As the leading builder of AI, we engage in countermeasures to protect our IP, including a careful process for which frontier capabilities to include in released models, and believe as we go forward that it is critically important that we are working closely with the U.S. government to best protect the most capable models from efforts by adversaries and competitors to take US technology.”

OpenAI tells us it has observed and investigated attempts to distill its models and has responded through banning the accounts in question and revoking access.

Security concerns

Meanwhile security concerns still seem to be dogging DeepSeek, particularly around the security of user data, exactly what data is being collected, and where it is storing it.

If you or your company has issues with data being stored in China, Perplexity, the AI search engine, is now offering its Pro users access to DeepSeek using data that is only stored on servers in the US.

New registrations for DeepSeek are still temporarily paused, “due to large-scale malicious attacks on DeepSeek's services”. For the latest news on this big breaking story, see the our DeepSeek live blog.