Italian regulator probes DeepSeek’s AI data protection practices

OpenAI’s rival DeepSeek faces regulatory scrutiny in Italy over data protection concerns while gaining popularity in the U.S. market.

Key developments: Italy’s data protection authority, the Garante, has requested detailed information from Chinese AI company DeepSeek about its data collection and storage practices.

• The regulator has given DeepSeek and its affiliated companies 20 days to provide information about what personal data they collect, their data sources, intended purposes, and legal basis
• A crucial question centers on whether DeepSeek stores user data in China
• This marks one of the first regulatory actions targeting the Chinese AI startup

Market impact: DeepSeek’s rising popularity has created ripples in both the tech industry and financial markets.

• The company’s free AI assistant has surpassed OpenAI’s ChatGPT in rankings on Apple’s App Store in the United States
• DeepSeek positions itself as a cost-effective alternative to U.S.-based competitors
• The company’s rapid rise triggered a tech stock selloff on Monday

Regulatory landscape: The Italian regulator’s action reflects growing scrutiny of AI companies in Europe and beyond.

• The Garante has established itself as one of Europe’s most proactive regulators in AI oversight
• In 2023, the authority temporarily banned ChatGPT in Italy over potential violations of EU privacy regulations
• The White House has also taken notice, with officials examining potential national security implications of DeepSeek’s app

Looking ahead: The regulatory investigation into DeepSeek highlights the increasing tension between rapid AI advancement and data privacy concerns, particularly when involving companies from different regulatory jurisdictions. The outcome could set important precedents for how international AI companies operate in European markets.