The AI Battle Heats Up: Research, Regulation, and Disruption + Guidance on How to Install DeepSeek on Your Laptop!

UWCISA Blog · UWCISA Feb 7, 2025: The AI Battle Heats Up - Research, Regulation, and Disruption

How do you use DeepSeek on your laptop? Check out this video!

In this video, David provides step-by-step guidance on installing LM Studio and DeepSeekR1. The full 400GB model likely won’t run on your laptop (it didn’t on mine), so you’ll need a distilled model. This smaller version is more manageable and easier to use. (See the next article for WSJ’s analysis of distillation).

AI Distillation Explained: How Smaller Labs Are Challenging Big Tech

AI distillation is emerging as a major concern for big tech companies, as it allows smaller AI labs to create powerful models at a fraction of the cost. The technique involves using outputs from advanced AI models (like OpenAI’s GPT) to train cheaper, smaller models that perform nearly as well. Chinese AI startup DeepSeek has been accused of distilling OpenAI’s models, potentially reducing the value of OpenAI’s proprietary technology.

• AI Distillation Threatens Big Tech – Smaller AI labs can now replicate powerful AI models cheaply, reducing the competitive advantage of Google, OpenAI, and Meta.
• DeepSeek Accused of Distillation – OpenAI suspects DeepSeek used ChatGPT’s outputs to train its own models.
• Billions vs. Millions – While big tech spends billions, companies like DeepSeek are proving AI can be developed for far less.

Source: WSJ

AI Takes Over Research: OpenAI’s Deep Research Automates Knowledge Work

OpenAI has launched Deep Research, an AI-powered agent designed to automate and streamline research tasks. Built on an optimized version of the o3 model, the tool can independently gather, analyze, and synthesize vast amounts of web data into a structured report within 5 to 30 minutes. Deep Research is particularly beneficial for professionals in finance, science, policy, and engineering, who require in-depth, niche information. The reports include clear citations and reasoning breakdowns, allowing users to verify accuracy. While OpenAI claims that Deep Research hallucinates less than previous models, it still requires human oversight. The tool is currently available only to ChatGPT Pro users ($200/month), with plans to expand access to other tiers. OpenAI's move comes amid growing competition, particularly from Google's Gemini Deep Research and Microsoft's Think Deeper features.

• AI-Powered Research Automation – Deep Research can generate structured research reports independently, reducing hours of work to minutes.
• Targeted at Professionals – Designed for experts in finance, science, and policy who need reliable, high-quality research.
• Limited Access & Cost – Available only to ChatGPT Pro users at $200/month, but OpenAI plans to expand access over time.

Source: ZDNet

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DeepSeek Crackdown: New US Law Could Mean Prison for Users

A newly proposed US law could impose harsh penalties on individuals and businesses using DeepSeek, a Chinese AI chatbot that recently surged in popularity. Introduced by Senator Josh Hawley, the bill aims to block AI technology from China by prohibiting US individuals and companies from engaging with Chinese-developed AI models. The legislation doesn't mention DeepSeek by name, but its release coincided with the app becoming the most popular AI tool in the US, leading to concerns about national security and data privacy. Those violating the law could face up to 20 years in prison or fines of $1 million for individuals and $100 million for businesses. The US Navy and NASA have already banned DeepSeek on government devices, and Texas became the first state to restrict its use.

• Proposed Ban on Chinese AI – A new law aims to block US individuals and businesses from using Chinese-developed AI models like DeepSeek.
• Severe Legal Consequences – Violations could lead to 20 years in prison or fines of up to $100 million for businesses.
• Security & Privacy Concerns – DeepSeek stores data in China, raising fears over surveillance and national security risks.

For the full text of the bill, see here. 

Source: Yahoo Finance

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Musk’s DOGE Is Building an AI Chatbot for the US Government

Elon Musk’s Department of Government Efficiency (DOGE) is developing GSAi, a custom AI chatbot for the US General Services Administration (GSA) as part of President Donald Trump’s AI-first agenda. The chatbot aims to boost productivity for GSA employees by automating tasks like managing government contracts, analyzing procurement data, and drafting memos. The project was initially considering Google’s Gemini, but Musk’s team opted for an in-house AI system instead. DOGE’s broader AI initiatives are focused on cutting government costs, but have sparked controversy, with critics arguing they lack transparency and security reviews. While Musk’s push aligns with Trump’s goal of US AI dominance, some federal employees and civil rights groups worry about the rapid, unchecked adoption of AI in government operations.

• Musk’s Government AI Chatbot – DOGE is building GSAi, an AI assistant for the General Services Administration to streamline government tasks.
• Part of Trump’s AI-First Agenda – The project aligns with Trump’s goal of making the US a global leader in AI and reducing government costs.
• Controversy & Security Concerns – Critics warn about lack of oversight, while employees worry about AI’s impact on government transparency.

Source: Wired

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Is Amazon Overspending? AI Race Heats Up with $100B Investment

Amazon has announced plans to spend $100 billion in capital expenditures in 2025, largely focused on AI infrastructure. This is a significant increase from $83 billion in 2024 and aligns with Amazon’s strategy to compete with AI leaders like OpenAI, Google, and Microsoft. The company is investing heavily in data centers, networking hardware, and AI chips to support AWS cloud AI services. CEO Andy Jassy emphasized that AI represents a "once-in-a-lifetime business opportunity", reassuring investors that this spending will drive long-term growth. However, skepticism is rising in the tech industry following the rapid and low-cost success of Chinese AI startup DeepSeek, which developed a competitive AI model for under $6 million. This has raised questions about whether big tech's massive AI spending is truly necessary.

• Amazon’s $100B AI Investment – The company is making one of its largest-ever AI investments, focusing on cloud infrastructure and AI development.
• Race Against Competitors – Amazon is competing with Google, Microsoft, and OpenAI, all of whom are also spending tens of billions on AI.
• DeepSeek Disrupts AI Economics – The low-cost success of DeepSeek’s AI raises concerns about whether such massive AI investments are sustainable.

Source: CNBC

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a Sr. AI Product Manager who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.

Understanding DeepSeek's AI Breakthrough: 5 Videos to Get You Up to Speed!

With the seismic impact of DeepSeek on AI, the stock market, and geopolitics, we wanted to follow-up our previous post with a deeper exploration of the topic. In this post, we found 5 videos that will help you get up to speed on the unfolding drama.  

Vid1: CNBC Covers the Ensuing Market Meltdown

CNBC discusses the impact of China's new AI model, DeepSeek, on the global tech industry. DeepSeek's superior efficiency and performance, even surpassing some American models, is causing a major sell-off in AI-related stocks, particularly impacting companies like Nvidia. The video explores concerns about DeepSeek's potential access to advanced technology and the implications for US technological dominance. The discussion also touches upon the shift towards open-source AI models and the uncertainty surrounding future investments in AI development. Finally, the video highlights the rapid advancement of AI technology and its potential societal impact, comparing the situation to the Sputnik moment of the space race.

Vid2: AI Enthusiast, Matt Wolfe, Gives His Take

Matt Wolfe, who closely follows the AI space, discusses DeepSeek R1, a new Chinese open-source AI model that has caused significant market reactions. DeepSeek's impressive performance, achieved with significantly less computing power than comparable models like GPT-4, is attributed to its efficient training methods and innovative design. Controversy surrounds DeepSeek's claims regarding its resource usage, with some suggesting the company downplayed the actual computational resources employed. Despite this, the video argues the model's impact may be positive, possibly lowering the barrier to entry for AI development and increasing overall demand for GPUs. The video also covers DeepSeek's image generation model, Janice Pro 7B, and provides instructions on how to access and utilize DeepSeek.

Vid3: A Geopolitical Perspective on the DeepSeek Saga

Here is Cold Fusion’s take on the DeepSeek story. He discusses the sudden emergence of DeepSeek R1, a free, open-source Chinese AI model that rivals—and in some ways surpasses—leading American AI models. Its unexpectedly low development cost and superior efficiency have sent shockwaves through the US stock market and prompted a reassessment of AI development strategies. Concerns about intellectual property theft are raised, alongside geopolitical implications of this technological advancement. The narrative explores the innovative techniques behind DeepSeek R1's performance and the competitive landscape it has created, highlighting the resulting cost reductions and potential for rapid AI progress globally.

Vid4: If you are using DeepSeek, Your Data is Going to China!

Skill Leap AI discusses serious privacy concerns regarding the DeepSeek website and app, highlighting issues like vague data retention policies, data storage in China raising compliance issues with international laws, lack of transparency in data usage, and insufficient age verification. The creator outlines these issues after reviewing the platform's privacy policy and terms of service using ChatGPT. To mitigate these risks, the video suggests using locally installed versions of DeepSeek R1 or utilizing DeepSeek's integration within the PerplexityAI search engine, a US-based service. Finally, the video promises a future comparison of DeepSeek R1 and ChatGPT's 01 model.

Vid5: A Video Walkthrough of Dario Amodei's take on DeepSeek's Capabilities

In this video, Matt Berman takes a look at Dario Amodei's take on the DeepSeek saga. Amodei, the current CEO of OpenAI’s chief rival Anthropic, wrote an essay discussing the implications of DeepSeek's AI model, R1, particularly concerning its potential data acquisition from OpenAI and the resulting impact on the AI industry and geopolitical landscape. The essay analyzes the three key dynamics of AI development: scaling laws, the shifting curve, and paradigm shifts, emphasizing the escalating costs and exponential advancements in AI capabilities. Concerns about China's access to advanced GPUs and their potential to achieve artificial general intelligence (AGI) are also highlighted, underscoring the importance of export controls. Finally, the essay argues that DeepSeek's cost-effective model, while impressive, does not represent a fundamental shift in AI economics and that the market's overreaction was unwarranted.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a Sr. AI Product Manager who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.

Five Top Tech Takeaways: OpenAI Takes On Search, Canva's GenAI Acquisition, EU AI Act Becomes Law, and More

OpenAI Take Aim At Google Search

Open AI's SearchGPT: Taking Aim At Search

Summary:
OpenAI has announced the launch of SearchGPT, a prototype designed to enhance AI search capabilities by integrating real-time information from the web. This new tool aims to deliver fast and accurate answers by combining the strengths of AI models with up-to-date web data. The prototype is initially available to a select group of users and publishers, who will provide feedback to help improve the tool before it is potentially integrated into ChatGPT.

SearchGPT offers a conversational search experience that mimics human interaction, allowing users to ask follow-up questions and receive clear, context-rich responses. OpenAI has partnered with publishers to ensure that high-quality content is highlighted and properly attributed, supporting a symbiotic relationship between AI technology and journalism.

The development of SearchGPT reflects OpenAI’s commitment to evolving AI-powered search technology while protecting the interests of content creators. Future enhancements will focus on areas such as local information and commerce, with the ultimate goal of seamlessly incorporating these features into ChatGPT.

• Enhanced Search Experience: SearchGPT is designed to provide fast and accurate answers using real-time web data, offering users a more efficient way to find information.
• Publisher Partnerships: OpenAI is collaborating with publishers to ensure content is accurately attributed and creators are properly credited, aiming to foster a thriving ecosystem for content discovery.
• Future Integration: Feedback from users and publishers will guide improvements, with plans to integrate the best features of SearchGPT into ChatGPT for a more comprehensive search tool.

(Source: OpenAI)

Landmark EU AI Law Targets U.S. Tech Firms with New Rules

Summary:
The European Union's groundbreaking AI Act has officially come into effect, marking a significant regulatory shift for artificial intelligence technologies. This comprehensive legislation introduces a risk-based framework to oversee AI applications, targeting large U.S. tech companies and beyond. The Act mandates stringent compliance measures for high-risk AI applications, such as autonomous vehicles and biometric identification systems, while banning those deemed "unacceptable," like social scoring.

U.S. technology giants, including Microsoft, Google, and Meta, will face increased scrutiny under the AI Act due to their extensive operations and data use within the EU. The law requires AI models to undergo risk assessments, maintain high-quality datasets to minimize bias, and provide transparency in their operations.

The AI Act is seen as a template for global AI governance, with other nations encouraged to adopt similar regulations. However, while the law has been enacted, most of its provisions won't be enforced until 2026, allowing companies a transition period to comply with the new rules.

• Comprehensive Regulation: The EU AI Act introduces a harmonized regulatory framework for AI, applying a risk-based approach to manage various applications, particularly focusing on high-risk systems.
• Impact on U.S. Tech Giants: Major American technology firms will need to comply with strict EU regulations, affecting their operations and data practices in Europe.
• Global Influence and Transition Period: The AI Act is expected to set a precedent for international AI legislation, with enforcement beginning in 2026, allowing time for companies to adjust.

(Source: CNBC)

Nasdaq 100 Selloff: Is the AI Bubble About to Burst?

Summary:
The Nasdaq 100 Index experienced a significant $1 trillion selloff as investor confidence in AI technology waned. This downturn, the worst since October 2022, was spurred by middling earnings reports from major companies like Alphabet and Tesla. Concerns over the return on investment (ROI) in AI infrastructure have led to increased market volatility, with options activity in companies like Nvidia and Broadcom reflecting investor anxiety.

This market correction comes amid fears of an AI bubble, where valuations for tech stocks have reached historically high levels. The selloff saw substantial declines in stocks of AI and semiconductor firms, including Nvidia, Broadcom, and Tesla. Despite the downturn, some analysts believe the move is temporary and driven by profit-taking rather than a fundamental shift in the outlook for AI.

The AI sector's future remains uncertain, as investors grapple with the time it will take for substantial AI investments to yield financial returns. However, optimism persists among some market participants, who view tech stocks as a more attractive option for growth due to their potential for earnings growth and fundamental strength.

• Market Volatility in AI Stocks: The Nasdaq 100 faced a $1 trillion selloff due to investor concerns over the ROI on AI investments, with significant stock declines in Nvidia, Broadcom, and Tesla.
• Bubble Concerns: Fear of an AI bubble is growing as tech valuations reach historically high levels, prompting increased scrutiny and bearish options activity in key AI companies.
• Mixed Outlook: While some view the selloff as a temporary correction, others see it as a warning sign for the AI sector, with the future of AI-driven financial gains remaining uncertain.

(Source: Bloomberg)

Meta's Llama 3.1: Leading the Charge in Open-Source AI

Summary:
Meta has announced the release of Llama 3.1, the latest in its line of open-source AI models. The Llama 3.1 405B model is the first frontier-level open-source AI model, boasting unmatched flexibility and state-of-the-art capabilities that rival closed-source models. This new model expands context length to 128K, supports eight languages, and aims to empower developers to create custom applications.

Meta is committed to an open-source approach, allowing developers to fully customize and deploy Llama models without sharing data with Meta. The release of Llama 3.1 includes enhanced safety and security tools, such as Llama Guard 3 and Prompt Guard, to ensure responsible AI use. Meta has also partnered with over 25 companies, including AWS and NVIDIA, to provide services on the first day of launch.

Llama 3.1 represents a significant step forward in AI accessibility and innovation, with Meta emphasizing the benefits of open-source AI for developers and the broader community. The model's advanced capabilities are expected to drive new workflows, such as synthetic data generation and model distillation, fostering further exploration and growth in AI applications.

• Open-Source AI Leadership: Meta's Llama 3.1 405B is the first open-source model at this scale, offering developers unprecedented access to state-of-the-art AI capabilities and customization options.
• Enhanced Features and Partnerships: The model supports eight languages and 128K context length, with safety tools like Llama Guard 3, and is backed by partnerships with major tech companies to facilitate adoption.
• Empowering the Community: By making Llama 3.1 available for free, Meta aims to democratize AI, enabling developers worldwide to innovate without the constraints of closed-source models.

(Source: Meta)

Canva's Generative AI Leap: Acquiring Leonardo.ai

Summary:
Canva has announced its acquisition of Leonardo.ai, an Australian startup specializing in generative AI content and research. Although financial details of the deal have not been disclosed, Canva aims to leverage Leonardo.ai’s advanced AI tools to enhance its suite of visual design products. The acquisition will allow Canva to incorporate Leonardo.ai’s customizable text-to-image and text-to-video generators into its existing Magic Studio products, providing a robust alternative to Adobe's creative software offerings.

Leonardo.ai will continue to operate its web platform as a separate product, similar to Canva’s earlier acquisition of the Affinity creative software suite. The integration of Leonardo.ai's technology is expected to further position Canva as a formidable competitor to Adobe, particularly in the realm of generative AI.

The acquisition also presents an opportunity for Canva to navigate the challenges of using generative AI responsibly, especially in light of recent controversies faced by Adobe regarding data use. Canva plans to capitalize on Leonardo.ai’s capabilities while maintaining transparency about data usage to avoid similar scrutiny.

• Strategic Acquisition: Canva acquires Leonardo.ai to integrate advanced generative AI tools into its platform, aiming to strengthen its position against Adobe in the creative software market.
• Enhanced AI Offerings: The acquisition will incorporate Leonardo.ai’s text-to-image and text-to-video generators into Canva’s Magic Studio, expanding its suite of visual design tools.
• Focus on Responsible AI Use: Canva seeks to differentiate itself by maintaining transparency in AI model training data to avoid controversies similar to those faced by Adobe.

(Source: The Verge)

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.