
Less than two weeks ago, leaders of American Big Tech pranced about on stage with the most powerful politician in the world at Donald Trump’s inauguration. It felt like they had the world sown up. At our expense as consumers and voters.
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Yet, in the past few days something truly astonishing has occurred in the world of tech, which may yet turn things upside down. In the field of Artificial Intelligence (AI), which is the latest and most exciting area of tech, we have just witnessed the arrival of two major competitors to the American AI giants.
Both are from China.
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The first is ByteDance’s Doubao-1.5-pro, which is an updated version of its flagship AI model. Doubao-1.5-pro outperforms OpenAI's o1 model in benchmark tests that measure how well AI models understand and respond to complex instructions. The second is DeepSeek-R1, an AI engine that also looks to be as good if not better than any AI engine produced by the Trump-Tech Monopolies.
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So what, you may ask? Aren’t they just another set of AI engines? Yes, they are, but with two important differences.
First, it is now clear that it is no longer just the United States that can produce high quality AI engines. In fact, AI engines may become rather abundant in the future, which means far more competition and therefore a likely drop in prices. Good for consumers, but bad for American AI shares.
Second, Chinese AI engines are being produced at a mere fraction of the cost of the big American models. Take DeepSeek's R1 model, which only cost a few million Dollars to make compared to the billions of Dollars invested to produce Meta AI and OpenAI. DeepSeek-R1 was developed by a private hedge fund, which just happened to have some outdated Nvidia chips lying around. Instead of throwing them out, it built an AI engine.
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More importantly, DeepSeek-R1 is free, open-source, and readily available at all good app stores (get yours here). I have used DeepSeek-R1 for some time and I cannot see how it is in any way inferior to its Western competitors. Go ahead, download the app and see for yourself!
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Critics will immediately latch onto the fact that Doubao-1.5-pro and DeepSeek-R1 are both Chinese engines. However, these engines are not Chinese government initiatives. Instead, they are private sector innovations. If you don’t believe me, ask DeepSeek-R1 about a sensitive issue such as the Chinese Cultural Revolution; you will find it gives you un-doctored answers, although Tiananmen Square seems to be a step too far. Still, on practically any other topic answers are similar to the US engines.
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What really scares American AI is the setup behind DeepSeek-R1, that is, the Chinese engine produces similar quality answers with far fewer resources and chips. Tech shares in Asia dropped on the news about the Chinese competition. US stocks followed suit, led by NVIDIA (see chart below).

NVIDIA stock crashed on the DeepSeek-R1 news (Source: here)
I have argued for some time that AI is a bubble – see here for more details. My view has been – and remains – that the crazy amount of money poured into AI in the United States is out of proportion with what AI technology can deliver. With the arrival of competition, the American AI Bubble seems even more obvious.
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The problems facing US tech are not confined to AI. US Big Tech is an oligopoly (see here). The big tech firms have been allowed to acquire monopoly power due to failures on the part of successive governments to apply existing anti-trust legislation. It seems governments are afraid to regulate Big Tech for fear of upsetting the stock market. Well, we now have the worst of all worlds. Big Tech has 'captured' the US government AND the stock is crashing!
But there is a silver-lining on this cloud. The arrival of DeepSeek-R1 and other genuine competitors to American AI offer real hope. These highly competitive entrants have exposed the classic weakness of monopolies, namely their tendency to become arrogant, fat, and lazy. Which American Big Tech has undoubtedly become. When a start-up like DeepSeek can produce an AI engine as good if not better than the Big Tech AI engines at only a fraction of the cost then clearly the AI giants have gotten way too inefficient.
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And bear in mind that we are not talking tiny marginal differences in efficiency here: DeepSeek-R1 proposes to charge USD 2.20 for access compared OpenAI's fee of more than 60 USD (see here). With competition this fierce, how can Big Tech ever hope to recoup the billions of Dollars it has invested?
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No wonder AI stocks are falling.
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Let me end this note with a quick comment on competition policy. It is crucial that technology is competitive. If it is not then consumers will pay a huge price. Our online choices will be curtailed even more. Our internet searches will be even more manipulated. Everything we buy and sell online will embed ever fatter margins for Big Tech, who own the very online market-places in which we shop.
For some years now, the European Union has bravely fought the Big Tech monopolies in court, but its efforts have been time-consuming and expensive, with very little impact. The Big Tech monopolies simply make too many super-normal profits to care. The punishment metered out in the courts, even when it runs into hundreds of millions of Dollars, is not enough to change their behaviour.
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A far more effective way to combat Big Tech monopolies is through competition by design, which is exactly what DeepSeek-R1’s open-source technology does. Everyone can access it; everyone can use its code to build new AI engines. This makes DeepSeek-R1 truly inclusive and democratic and competitive. This is what we want. This is what is good for the economy.
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The next shoe to drop surely has to be online commerce, which similarly needs a kick up the competition. The simplest, cheapest, and most effective way to combat online retail monopolies is to introduce protocols on internet servers that ensure everyone can access online markets without paying homage (and fees) to an E-commerce giant. The Beckn Protocol is such a protocol (see here). It is free and easily accessible. So stop wasting eye-watering amounts of tax-payers’ money on expensive and ineffective anti-trust suits.
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