DeepSeek accused of powering China’s military and mining US user data
DeepSeek has willingly provided and will likely continue to provide support to China’s military and intelligence operations, according to a senior US State Department official, raising serious questions about data security for the millions of Americans using the popular AI service.
The Chinese artificial intelligence startup DeepSeek is reportedly actively supporting China’s military and intelligence apparatus while employing sophisticated workarounds to access restricted US semiconductor technology, according to Reuters.
“We understand that DeepSeek has willingly provided and will likely continue to provide support to China’s military and intelligence operations,” the report said, quoting a senior State Department official. “This effort goes above and beyond open-source access to DeepSeek’s AI models.”
“DeepSeek sought to use shell companies in Southeast Asia to evade export controls, and DeepSeek is seeking to access data centers in Southeast Asia to remotely access US chips,” the report added, quoting the official. The allegations come as the Hangzhou-based company’s AI models have gained widespread adoption across US cloud platforms and among US users.
Military connections run deep
The company is referenced more than 150 times in procurement records for China’s People’s Liberation Army and other entities affiliated with the Chinese defense industrial base, according to the US official, who added that DeepSeek had provided technology services to PLA research institutions.
This adds context to recent reports of DeepSeek’s military applications. The PLA has >utilized DeepSeek’s latest AI models for non-combat tasks, including hospital settings and personnel management. Meanwhile, a research team at a university in northwest China employed the AI to generate 10,000 military scenarios in 48 seconds — a task that traditionally requires 48 hours for human commanders.
Chinese defense contractors have also integrated DeepSeek into autonomous military vehicles, with Chongqing Landship recently deploying it in a self-driving military vehicle at an international defense exhibition.
An Nvidia Spokesperson said DeepSeek acquired its products lawfully. “With the current export controls, we are effectively out of the China datacenter market, which is now served only by competitors such as Huawei. Our review indicates that DeepSeek used lawfully acquired H800 products, not H100,” the spokesperson said.
“DeepSeek’s models are open-sourced, allowing developers to modify them as they see fit. Each developer decides how to handle user information subject to applicable laws.We do not support parties that have violated US export controls or are on the US entity lists. We rely on the US government to update the controls and lists as it deems appropriate.Forcing developers to use foreign AI stacks for non-military applications only hurts America in the AI race. The US wins whenever a developer promotes the US AI stack. China has one of the largest populations of developers in the world, creating open-source foundation models and non-military applications used globally. While security is paramount, every one of those applications should run best on the US AI stack,” the spokesperson said.
Export control failures exposed
The allegations highlight what experts describe as fundamental flaws in current US export control policies. “The DeepSeek episode has spotlighted a structural weakness in the US export control regime: the increasing obsolescence of hardware-focused policies in a cloud-native, AI-driven world,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research.
DeepSeek allegedly has access to “large volumes” of Nvidia’s high-end H100 chips despite these processors being under strict US export restrictions since 2022. Beyond shell companies, Chinese organizations with military ties are circumventing restrictions by using cloud platforms like Amazon Web Services and Oracle Cloud to access cutting-edge chip power without physical ownership.
Gogia argues that current hardware-focused controls fail to account for “distributed, virtualized environments” where “entities can lease advanced GPUs via third-party cloud access or operate under shell identities across permissive jurisdictions.” He advocates for export controls to evolve toward “a behavioral and intent-based model that evaluates not just what is being used, but how and by whom.”
Data security and surveillance concerns
Among the allegations, the official cited in the report said DeepSeek is sharing user information and statistics with Beijing’s surveillance apparatus. According to Stanford Cyber Policy Center, DeepSeek gathers comprehensive information, including personal details, all text and audio inputs, uploaded files, complete chat histories, and keystroke tracking patterns.
US lawmakers have previously noted that DeepSeek transmits American users’ data to China through “backend infrastructure” connected to China Mobile, a Chinese state-owned telecommunications giant.
Cloud platform paradox creates enterprise risk
Despite the allegations, Amazon, Microsoft, Google, Huawei, and Alibaba Cloud continue offering DeepSeek models to customers, making the startup’s AI widely accessible to enterprise users.
This corporate embrace contrasts sharply with government responses. The US Congress, Navy, Pentagon, NASA, and Texas have banned DeepSeek usage, while Italy blocked DeepSeek in a country-wide prohibition.
“The widespread availability of large language models via public cloud marketplaces, often with ambiguous provenance, unclear jurisdictional obligations, and hidden lineage, creates significant risk exposure for US enterprises,” Gogia warned. He noted that organizations are “effectively ingesting black-box models whose training data, hosting infrastructure, and developer affiliations may be misaligned with their compliance obligations.”
For enterprise customers, the revelations demand immediate policy changes. Gogia recommends organizations “evolve from vendor trust to systemic verification” through AI chain-of-custody audits and strict legal clauses governing data retention and jurisdictional obligations.
“AI integration pipelines must be redesigned with whitelisting at their core, enabling only those vendors that have demonstrably met audit requirements for security, governance, and geopolitical neutrality,” he said. “As AI becomes a strategic backbone rather than a functional add-on, the cost of operational opacity now carries enterprise-wide ramifications.”
Strategic implications and policy gaps
The allegations come amid intensifying US-China AI competition. DeepSeek represents the first time a Chinese AI lab has demonstrated breakthroughs at the absolute frontier of foundational AI research, marking a significant milestone in China’s capabilities.
When DeepSeek’s R1 model launched in January, it briefly caused Nvidia to lose more than $600 billion in market valuation as investors questioned assumptions about AI development costs and competitive advantages.
Some experts question DeepSeek’s claimed breakthroughs, arguing the true training costs were likely much higher than the reported $5.58 million, especially if the company had access to more advanced hardware than publicly disclosed.
Chinese companies create numerous shell companies faster than the Department of Commerce can track them, while export controls remain challenging as semiconductor chips are small, easily concealed, and produced by the millions.
When asked about potential additional sanctions, the official said the department had “nothing to announce at this time,” the report added.
DeepSeek did not respond to our requests for comment about the allegations. Amazon, Microsoft, and Google also did not immediately respond to requests for comment about their continued offering of DeepSeek models.
The detailed allegations suggest US officials are building a comprehensive case regarding the company’s activities, potentially setting the stage for more restrictive measures against Chinese AI firms operating in global markets.Mosyle’s AccessMule makes employee access a little easier for SMBs – ComputerworldRead More