Chinese AI Portal Under Cyberattack
This weekend a Chinese company announced an AI model that, they say (no evidence) cost $5 million to train vs. the $500 billion that the president is trying to put together for US companies to develop their models. The Chinese model, R1, is on par with the best we have to offer.
The DeepSeek app rose to number one in the Apple app store over the weekend.
Today there is a cyberattack going on against DeepSeek’s registration server, making it difficult for new users to register. They say existing users are not affected.
No one is admitting that they are behind the attack. The president and his minions have said many times that we should go on the offensive against China, so it could even be us. Completely unknown right now.
But there is a downside to the attack. Since DeepSeek has released multiple versions of the software as open source, anyone who has a server can deploy their own instance of it. All the attack does is spread the tool in many different directions making it much more difficult to control.
Will the Chinese retaliate? Again, unclear.
The problem with denial of service attacks is that they take a lot of server capacity to sustain so these attacks typically don’t last. To sustain such an attack requires either a lot of servers under your control or hacking other people’s servers to achieve the result.
In the meantime, that will not stop DeepSeek from deploying their software. It may require them to do a better job of packet filtering or deploy more server capacity on their end, but neither of these tasks are difficult for China to do.
It will, however, give DeepSeek a lot of free press and in this case, that free press will be good for them.
On the other hand, the market took note of this today.
Nvidia lost $600 billion in market cap in one day-down nearly 17%. Meta and Alphabet were also sharply down. Nvidia competitors like Broadcom and TSMC were also down sharply. The Nasdaq was down 600 points; the S&P 500 was down almost 90.
While this seems like a bit of an over reaction, that is what the market does. Energy stocks, which have been very attractive because of the power requirements of US AI servers also tanked. Constellation Energy was down 21%, Vistra was down 28% and GE Vernova was also down 21%.
Bitcoin was also down from its insane highs but has started to recover.
Will this all recover tomorrow? I don’t know, but I suspect that until people have this all sorted out, traders will be very nervous.
From an end user perspective, this is all good. We already say Google reduce the price of its AI agent, Gemini to between $2 and $4 per user. Microsoft Co-Pilot pro is $20 a month. Likely that won’t last with the competition, so again, good for users but not so good for vendors who have been raking in the dough.
Credit: Hack Read
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