A pioneer in artificial intelligence has raised questions about the sustainability of the ChatGPT operator, OpenAI and found that the Chinese rival, DeepSeek, was trained at a fraction of the cost.
DeepSeek sparked a rivalry between China and the US in January by releasing an open-source version of its AI model, R1. Unlike its American counterpart, ChatGPT, the Chinese bot is free and accessible without a subscription, which contributed to its rapid rise to the most downloaded application in Apple and Google app stores.
“If you consider the operating costs of OpenAI, which are around $7 billion in 2024, then DeepSeek likely operates with only 2 percent of those costs” said Kai-Fu Li, a writer, venture capitalist and technology expert with over 30 years of experience in AI, in an interview with Bloomberg on Thursday.
Li is the founder of Sinovation Ventures, a venture capital firm that focuses on supporting Chinese startups in AI and technology. He also founded a KI institute, which primarily focuses on the integration of new technologies in traditional industries and the development of AI-driven startups. Prior to that, he worked as a founding director of Microsoft Research Asia and then for Google and Apple.
One of the expert’s questions is whether the model of OpenAI is sustainable.
Li pointed out that OpenAI gives out $87 billion a year and makes a massive loss, contrasting this with DeepSeek, which is offered to developers for free or at a fraction of the cost.
“With such a formidable competitor, I believe Sam Altman is not sleeping well” he said, referring to the CEO of OpenAI.
The venture investor and founder of 01.AI had previously stated that only three models of AI – DeepSeek, Alibaba Group Holding and ByteDance – would survive China’s internal shake-up, triggered by the appearance of DeepSeek. Li added that xAI, OpenAI, Google and Anthropic would lead the sector in the US.
He emphasized that pioneer models like ChatGPT are marketed, making the business model of US developers vulnerable to cheaper variants, represented by open-source KIs like DeepSeek.