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Of course, OpenAI scraped the entire web without permission to train its initial models, so it's pretty hard to complain that its models have now been ripped off, but that's the world we live in.

Of course, OpenAI scraped the entire web without permission to train its initial models, so it's pretty hard to complain that its models have now been ripped off, but that's the world we live in.

Regardless, DeepSeq is proof that the closed-sourced approach to AI, the one that's most advantaged OpenAI up until now, is not as much of a head start as anyone once believed, or built a sky-high valuation around. If a startup spun out of a Chinese hedge fund can do this with so little time and resources, well, maybe there's no moat around these frontier models at all.

Regardless, DeepSeq is proof that the closed-sourced approach to AI, the one that's most advantaged OpenAI up until now, is not as much of a head start as anyone once believed, or built a sky-high valuation around. If a startup spun out of a Chinese hedge fund can do this with so little time and resources, well, maybe there's no moat around these frontier models at all.

Regardless, DeepSeq is proof that the closed-sourced approach to AI, the one that's most advantaged OpenAI up until now, is not as much of a head start as anyone once believed, or built a sky-high valuation around. If a startup spun out of a Chinese hedge fund can do this with so little time and resources, well, maybe there's no moat around these frontier models at all.

It's still very early, and there's no definitive takeaway on how DeepSeq might affect the AI industry over the long term. According to Kiley, the major decline in NVIDIA's share price might be much more about the market correcting an obviously overvalued stock than it is about the industry losing faith in the effectiveness of NVIDIA chips.

It's still very early, and there's no definitive takeaway on how DeepSeq might affect the AI industry over the long term. According to Kiley, the major decline in NVIDIA's share price might be much more about the market correcting an obviously overvalued stock than it is about the industry losing faith in the effectiveness of NVIDIA chips.

It's still very early, and there's no definitive takeaway on how DeepSeq might affect the AI industry over the long term. According to Kiley, the major decline in NVIDIA's share price might be much more about the market correcting an obviously overvalued stock than it is about the industry losing faith in the effectiveness of NVIDIA chips.

In her reporting this week, she says experts told her DeepSea could actually benefit the larger model makers because they'll be able to replicate the efficiency gains on future reasoning models like O1 and R1. This is why everyone keeps talking about Jevons paradox, an economic concept that everyone seems to have learned about the past several days that hopefully explains everything.

In her reporting this week, she says experts told her DeepSea could actually benefit the larger model makers because they'll be able to replicate the efficiency gains on future reasoning models like O1 and R1. This is why everyone keeps talking about Jevons paradox, an economic concept that everyone seems to have learned about the past several days that hopefully explains everything.

In her reporting this week, she says experts told her DeepSea could actually benefit the larger model makers because they'll be able to replicate the efficiency gains on future reasoning models like O1 and R1. This is why everyone keeps talking about Jevons paradox, an economic concept that everyone seems to have learned about the past several days that hopefully explains everything.

Basically, it means that making a resource cheaper will lead to increased consumption of that resource. Think of it a little bit like engines and gasoline. If you make an engine more fuel efficient, it uses less gas. So it's cheaper to run, which means you might run it more and eventually use more gas than you were using to begin with.

Basically, it means that making a resource cheaper will lead to increased consumption of that resource. Think of it a little bit like engines and gasoline. If you make an engine more fuel efficient, it uses less gas. So it's cheaper to run, which means you might run it more and eventually use more gas than you were using to begin with.

Basically, it means that making a resource cheaper will lead to increased consumption of that resource. Think of it a little bit like engines and gasoline. If you make an engine more fuel efficient, it uses less gas. So it's cheaper to run, which means you might run it more and eventually use more gas than you were using to begin with.

My friend Ben Thompson of the newsletter Stratechery made a similar argument, writing this week that DeepSeek, quote, provided a massive gift to nearly everyone and that the biggest winners are consumers and businesses who can anticipate a future of effectively free AI products and services.

My friend Ben Thompson of the newsletter Stratechery made a similar argument, writing this week that DeepSeek, quote, provided a massive gift to nearly everyone and that the biggest winners are consumers and businesses who can anticipate a future of effectively free AI products and services.

My friend Ben Thompson of the newsletter Stratechery made a similar argument, writing this week that DeepSeek, quote, provided a massive gift to nearly everyone and that the biggest winners are consumers and businesses who can anticipate a future of effectively free AI products and services.

According to Thompson, quote, a world of free AI is a world where product and distribution matters most, unquote. And as we talk about here on Decoder quite a bit, distribution is where big consumer tech companies like Apple and Google still have the most advantage because they control the phones and the app stores.

According to Thompson, quote, a world of free AI is a world where product and distribution matters most, unquote. And as we talk about here on Decoder quite a bit, distribution is where big consumer tech companies like Apple and Google still have the most advantage because they control the phones and the app stores.

According to Thompson, quote, a world of free AI is a world where product and distribution matters most, unquote. And as we talk about here on Decoder quite a bit, distribution is where big consumer tech companies like Apple and Google still have the most advantage because they control the phones and the app stores.