OpenAI Seems to Be Low Key Panicking

Chinese AI startup DeepSeek shocked the tech industry with its extremely cost-effective AI model, trained at a fraction of the cost of its far more resource-intensive rivals in the US.

DeepSeek turned out to be a force to be reckoned with, triggering a more than $1 trillion selloff, with spooked investors wondering whether they had grossly overpaid the likes of OpenAI and Meta for years.

And while OpenAI CEO Sam Altman has since congratulated DeepSeek for its "impressive" R1 reasoning model, he also promised investors to "deliver much better models."

But considering the big changes the ChatGPT maker is planning, as Bloomberg reports, OpenAI seems genuinely shaken, not just invigorated by a "new competitor," as Altman termed DeepSeek. In fact, it seems a lot like the company is quietly panicking as it tries to deliver a worthy retort to DeepSeek's foundations-shaking offering.

For one, OpenAI executives revealed the company would mimic DeepSeek's R1 by showing more of its AI models' "reasoning steps," according to Bloomberg.

There's also the question of pricing. It made its o3-mini reasoning model free for all users last month, in another apparent attempt to compete with DeepSeek.

The company is also reportedly reconsidering its approach to open source. Despite its misleading name, OpenAI has become a largely for-profit, closed-source company that keeps its cards extremely close to its chest. By contrast, DeepSeek's R1 is an open-source model.

During a Reddit AMA earlier this week, Altman said that he thinks "we have been on the wrong side of history here and need to figure out a different open source strategy."

"Not everyone at OpenAI shares this view, and it's also not our current highest priority," he added.

And it's not just OpenAI. Meta CEO Mark Zuckerberg has also addressed the topic during a recent earnings call.

"I think that there’s a number of novel things that they did that I think we’re still digesting," he told investors last month, admitting that Meta is hoping to "implement" some aspects of DeepSeek's tech "in our systems."

"And that’s part of the nature of how this works, whether it’s a Chinese competitor or not," Zuckerberg said.

Other executives are openly hoping that US protectionism will save them. Anthropic CEO Dario Amodei also called for US lawmakers to implement new restrictions on AI chip exports to stop China from catching up too quickly.

Still, the US AI industry hasn't changed its plan to pour hundreds of billions of dollars into expanding infrastructure. At the heart of this movement is president Donald Trump's OpenAI-backed Stargate initiative, which aims to raise a whopping half a trillion dollars in four years. (Whether it'll be successful in doing so remains to be seen.)

DeepSeek, meanwhile, has ironically become a victim of its own success, limiting access to its AI models due to shortages in server capacity.

In other words, even with its extremely efficient reasoning model, scaling up the operation to meet demand remains an ongoing issue — which could offer OpenAI at least a little bit of breathing room.

More on OpenAI: Sam Altman Regrets Ditching Open Source, Says He's Been on the "Wrong Side of History"

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