China's DeepSeek AI sparks national security fears over American user data: Will US ban it?

DeepSeek, the Chinese AI startup that triggered a $1 trillion market downturn in the United States this week, is storing vast amounts of American user data on servers in China.

This has raised concerns about national security with the same issues that led Congress to take action against TikTok. As DeepSeek rapidly gains popularity among US users, officials in Washington are now assessing the potential risks associated with its rise, according to White House press secretary Karoline Leavitt.

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Will US ban DeepSeek?

"I spoke with [the National Security Council] this morning, they are looking into what [the national security implications] may be," said Leavitt. She also reiterated US President Donald Trump’s recent statement, warning that DeepSeek should serve as a wake-up call for the American tech sector.

US Navy prohibits personnel from using DeepSeek due to 'potential security and ethical concerns'

These concerns follow reports that the US Navy has prohibited its personnel from using DeepSeek’s applications due to "potential security and ethical concerns."

According to CNBC, the US Navy issued an internal email advising staff against using the DeepSeek app, citing "potential security and ethical concerns associated with the model's origin and usage."

Meanwhile, OpenAI, the company behind ChatGPT, has said that it will collaborate closely with the US government to prevent competitors from gaining access to its technology.

The launch of DeepSeek’s open-source R1 model has unsettled global financial markets, as the Chinese firm appears to have achieved similar results to its competitors at a fraction of the cost and computational resources.

As a result, on Monday, chip manufacturer Nvidia saw its stock suffer the largest single-day loss in market history. Shares of Meta, Microsoft, and other AI firms also saw a sharp decline.

(With inputs from agencies)