FEBRUARY 2025
DeepSeek
A Problem or an Opportunity for Europe?
By Laura Caroli
Introduction
On January 20, 2025, Chinese AI company DeepSeek released its R1 reasoning model, causing U.S.
policymakers and technologists to dramatically reevaluate their assumptions about the state of the Chinese
AI ecosystem. President Donald Trump noted, “The release . . . should be a wake-up call for our industries
that we need to be laser-focused on competing to win, because we have the greatest scientists in the world.”
R1, and the DeepSeek V3 model it was based on, demonstrates an innovative approach to AI model
development in several important ways, primarily in cost and compute eciency. This did not come
without controversies. White House AI Czar David Sacks said there is “substantial evidence” that
DeepSeek distilled knowledge out of OpenAI’s models. Meanwhile, OpenAI alleged that DeepSeek’s use
of data distilled from OpenAI’s models in training R1 broke OpenAI’s terms of service.
The controversy was not limited to the United States, however. European regulators have greeted
DeepSeek’s rise with concern, even as leading European AI companies have expressed excitement.
Positive News for European Startups . . .
European startups have hailed R1 as a major advancement and opportunity, as it hints at the possibility
for EU startups to successfully compete despite disadvantages (compared with U.S. rms), such as the
lack of capital and limited access to large-scale compute infrastructure. French AI champion Mistral
AI has been particularly enthusiastic about R1’s release, claiming that it proves the viability of an
emerging wave of mini-language models (using far fewer parameters and running on far less compute).
On January 30, Mistral announced its latest AI model, praising R1 in the press release as a “a great and
complementary piece of open-source technoloy!” Mistral’s CEO Arthur Mensch went even further in an
interview on February 10, calling DeepSeek “a player that is very similar to us” and saying it is “China’s
Mistral.” Companies do not normally compliment their ostensible competitors when announcing new
products. That Mistral chose to do so highlights just how much they believe DeepSeek has changed the
