Taiwan has officially banned government agencies from using DeepSeek’s AI technology, citing significant national security concerns over data transmission and potential information leakage. The Ministry of Digital Affairs announced on Friday that public sector workers and critical infrastructure facilities are prohibited from using the Chinese AI company’s products, stating that the platform’s operations involve “cross-border transmission and information leakage” that “endangers national information security.”
DeepSeek, a Chinese AI laboratory founded in 2023, captured global attention in January after unveiling its flagship R1 AI model, which the company claims matches the reasoning capabilities of leading US models like OpenAI’s o1 but at a fraction of the development cost. The announcement sent shockwaves through financial markets, with AI stocks tumbling significantly as investors reassessed the competitive landscape and questioned the sustainability of massive AI infrastructure investments.
Taiwan’s ban represents the latest in a growing wave of regulatory scrutiny facing DeepSeek across multiple jurisdictions. Italy’s Data Protection Authority (Garante) blocked access to the DeepSeek app on Thursday, expressing dissatisfaction with the company’s response to inquiries about personal data usage. Garante stated that DeepSeek companies “declared that they do not operate in Italy and that European legislation does not apply to them,” prompting an official investigation into potential GDPR violations.
Ireland’s Data Protection Commission has also engaged with DeepSeek, reportedly requesting detailed information about how the platform processes Irish users’ data. In the United Kingdom, AI Minister Feryal Clark issued a public warning to British citizens considering using DeepSeek, advising users to “be alert to the potential risks and they know how their data will be used,” while acknowledging that downloading the app remains a personal choice.
DeepSeek was founded by Chinese entrepreneur Liang Wenfeng as an AI side project before becoming a standalone company in 2023. The rapid regulatory pushback highlights growing tensions between technological innovation and data sovereignty concerns, particularly regarding AI systems developed in China and their handling of user information across international borders.
Key Quotes
its operation involves cross-border transmission and information leakage and endangers national information security
Taiwan’s Ministry of Digital Affairs stated this in their official announcement banning DeepSeek from government use, highlighting specific concerns about data sovereignty and the risks posed by Chinese AI technology to national security infrastructure.
Contrary to what was found by the Authority, the companies declared that they do not operate in Italy and that European legislation does not apply to them
Italy’s Data Protection Authority (Garante) made this statement when explaining their decision to block DeepSeek, revealing the company’s apparent refusal to acknowledge European data protection regulations and triggering an official investigation.
Ultimately it is a personal choice for people, whether they decide to download it or not. My advice will be to make sure if people are downloading it that they are alert to the potential risks and they know how their data will be used
UK AI Minister Feryal Clark issued this cautionary statement to Bloomberg, balancing individual freedom with public safety concerns while warning British citizens about potential data risks associated with using DeepSeek’s AI platform.
Our Take
The rapid regulatory backlash against DeepSeek reveals a fundamental tension in the AI era: technical innovation cannot exist in a geopolitical vacuum. While DeepSeek’s cost-effective approach initially appeared to democratize advanced AI capabilities, the company’s apparent disregard for international data protection laws and cross-border data concerns has triggered a coordinated regulatory response.
This case establishes an important precedent that AI systems will increasingly be evaluated not just on performance metrics, but on data governance, transparency, and regulatory compliance. The contrast between DeepSeek’s technical achievements and its regulatory struggles suggests that future AI leaders will need to build trust frameworks alongside technological capabilities. As geopolitical tensions intensify, we’re likely witnessing the emergence of distinct AI spheres of influence, where Western markets prioritize data sovereignty and transparency while Chinese AI systems face growing access barriers. This fragmentation could significantly reshape the competitive dynamics that initially made DeepSeek’s breakthrough so disruptive.
Why This Matters
This development represents a critical inflection point in the global AI landscape, highlighting the intersection of technological innovation, geopolitical tensions, and data sovereignty concerns. Taiwan’s ban, combined with regulatory actions from Italy and inquiries from Ireland, signals that DeepSeek’s cost-effective AI breakthrough may face significant barriers to international adoption despite its technical achievements.
The story matters because it demonstrates how national security and data privacy concerns can quickly override technological advantages in the AI sector. DeepSeek’s R1 model initially disrupted assumptions about AI development costs and competitive moats, causing billions in market value losses for US tech companies. However, these regulatory hurdles reveal that technical superiority alone cannot guarantee market access in an increasingly fragmented digital world.
For businesses and policymakers, this case illustrates the growing importance of data governance and regulatory compliance in AI deployment. Companies developing AI systems must now navigate complex international regulations while addressing legitimate concerns about cross-border data flows, particularly when geopolitical tensions influence technology policy. This trend will likely accelerate the development of regional AI ecosystems with distinct regulatory frameworks, potentially fragmenting the global AI market.
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Source: https://www.businessinsider.com/taiwan-bans-government-agencies-ai-deepseek-security-concerns-2025-2