DeepSeek: the free Chinese model that overtook ChatGPT

DeepSeek cost about 6 million dollars to build, runs for free, and knocked 18% off Nvidia's share price in a day. Here is what it does well, and what to consider before you use it.

In January 2025 a mostly unknown Chinese chatbot called DeepSeek overtook ChatGPT as the most downloaded app, and Nvidia's stock dropped 18% in a single day. Not a bad week for a company few people had heard of.

From hedge fund to AI lab

Liang Wenfeng co-founded a hedge fund before he started DeepSeek in July 2023 and moved from finance to AI development. The company is based in Hangzhou.

The number worth remembering: OpenAI spent over 40 million dollars developing ChatGPT-4. DeepSeek-V3 cost around 6 million. And it was built under American sanctions.

The technology

DeepSeek is a Mixture-of-Experts model with 671 billion parameters, of which 37 billion are active per token. The bigger deal is that it is open source. Anyone can inspect the weights and run the model themselves.

What you can use it for

Writing: everything from work emails to fiction
Programming: many developers report it understands complex code better than ChatGPT
Learning: it works as a patient personal tutor
Problem solving: it "thinks out loud" and shows you its reasoning step by step

DeepSeek vs ChatGPT

The price difference is simple. ChatGPT Plus costs $20 a month. DeepSeek is free.

ChatGPT still has advantages: a more polished experience, image generation and voice conversations, and better integration with other services.

DeepSeek's advantages: it is better at programming and technical tasks, it shows its thought process, it is open source so you can run it offline, and there is no cap on the number of queries.

Strengths, weaknesses and concerns

The good: completely free with no hidden costs, performance on par with the best models, full transparency through open source, and strong programming ability.

The less good: the interface is rougher than ChatGPT's, there are fewer features, and it refuses certain topics, especially Chinese politics.

The concerning: DeepSeek is Chinese-owned, and your data is stored in China. There is data collection. And there are geopolitical implications that reach beyond any single user.

What it means for the future

Capable AI is no longer reserved for tech giants
OpenAI, Google and Microsoft have to rethink their pricing
The American attempt to slow China's AI development has proven less effective than assumed
When AI gets cheaper to build, expect a wave of new applications

A turning point, with caveats

DeepSeek proves that a top-tier model does not have to cost a fortune to build or to use. Six million dollars, given away for free. If your data can live in China, it is worth a look. If it can't, your negotiating position with the American vendors still just improved.