DeepSeek faces South Korean investigation over data privacy issues, following scrutiny in Italy and France

South Korea's data protection authority has announced it will seek clarification from Chinese tech startup DeepSeek regarding its handling of users' personal information. This comes after the company unveiled its powerful new AI chatbot, the R1, which has raised concerns over data privacy and sparked turmoil in global tech markets.

DeepSeek's R1 chatbot is being touted as a major challenger to leading AI systems developed in the United States, offering comparable capabilities at a fraction of the cost. The launch has sent shockwaves through the tech industry, with stocks in major companies such as Nvidia plummeting by 17 per cent earlier this week. The chatbot’s rapid advancement has prompted scrutiny over the enormous investments made by American firms in AI technology in recent years.

A spokesperson from South Korea's Personal Information Protection Commission confirmed to AFP that they would formally request information from DeepSeek regarding the AI’s data processing practices. However, details of the request have not yet been disclosed.

The company’s R1 model has also attracted attention from regulators in Europe. Italy’s data protection agency initiated an investigation into DeepSeek's AI, blocking the processing of personal data from Italian users. Authorities are keen to determine the origins of the data used to train the chatbot and whether users have been adequately informed about how their data is handled, particularly if it has been scraped from the internet.

Similarly, France’s CNIL data watchdog announced it would also be engaging with DeepSeek to understand the potential risks associated with the AI system’s data processing mechanisms.

DeepSeek, which uses the less-advanced H800 chips — previously permitted for sale to China under US export controls until 2023 — has claimed its model is built on a significantly smaller investment compared to its American counterparts. Despite using less advanced technology, the AI’s impressive performance has raised eyebrows among industry experts, especially given its ability to rival US AI advancements.

The uncertainty surrounding DeepSeek’s AI has caused significant ripples in the South Korean stock market. Shares of Samsung Electronics fell by more than 2 per cent, while SK hynix saw a nearly 12 per cent drop, with analysts attributing the losses to mounting fears about the impact of DeepSeek’s rise on the global AI landscape.

(With inputs from AFP)