Leadership CONNECT: 30-JAN-2025 (Y25W06)

Greetings AI Thinkers,

This week’s Leadership CONNECT:

1. Spark of the week: Five Conflicts to Follow – Stargate/DeepSeek War
2. Focused Spark: More About Deepseek
3. Focused Spark: More About StarGate
4. Focused Spark: DeepSeek Privacy
5. Curated Sparks: AI MindLi Resources

Happy Thinking,
Dr. Yesha Sivan and the MindLi Team

P.S. Comments, ideas, feedback? Send me an e-mail.

1. Spark of the week: Five Conflicts to Follow – Stargate/DeepSeek War

Source: MindLi

Background

On January 20, 2025, Stargate was launched. Hosted by President Trump, alongside Larry Ellison from Oracle, Masayoshi Son, a prominent investor from Japan, and Sam Altman from OpenAI, a $500 billion investment was initiated to advance AI infrastructure. “…Together, these world-leading technology giants are announcing the formation of Stargate, a new American 🇺🇸 company. Put that name down in your books because I think you’re going to hear a lot about it,” said Trump. (YouTube)

In response, DeepSeek, a small firm from China 🇨🇳, released a groundbreaking open-source model, directly competing with U.S.-based models. CNBC reported, “A little-known AI lab out of China has ignited panic throughout Silicon Valley after releasing AI models that can outperform America’s best despite being built more cheaply and with less powerful chips.

DeepSeek, as the lab is called, unveiled a free, open-source large-language model in late December that it says took only two months and less than $6 million to build. The new developments have raised alarms on whether America’s global lead in artificial intelligence is shrinking and called into question big tech’s massive spend on building AI models and data centers.

In a set of third-party benchmark tests, DeepSeek’s model outperformed Meta’s Llama 3.1, OpenAI’s GPT-4o, and Anthropic’s Claude Sonnet 3.5 in accuracy, ranging from complex problem-solving to math and coding.” (
CNBC)

According to Reuters, global investors dumped tech stocks on Monday amid concerns that the emergence of a low-cost Chinese AI model threatened the dominance of AI leaders like Nvidia. The chipmaker’s market value evaporated by $593 billion, marking a record one-day loss for any company on Wall Street.

Is this the burst of the AI bubble? I will reflect on that in the conclusion. For now, let’s delve deeper into five emerging conflicts that the DeepSeek/Stargate war exhibits:

Five Conflicts Exhibited in the DeepSeek/StarGate War

1. China vs. USA

The AI competition between China and the U.S. highlights a significant geopolitical struggle where technological advancements are becoming the cornerstone of global influence. Both nations aim to dominate AI innovation, leading to an escalating race with far-reaching economic and national security implications.

2. Personal Data vs. Shared Data

The conflict between personal data privacy and the benefits of shared data underpins the ethical dilemmas of AI development. While shared data drives innovation and model efficiency, safeguarding individual privacy remains a critical challenge in creating responsible AI systems.

3. Open Source vs. Closed Source

Open-source AI models offer accessibility and community-driven progress, contrasting with closed-source systems that prioritize proprietary advancements and monetization. This divide raises questions about fairness, transparency, and the democratization of technology.

Personally, I think that open source is more of a distribution model, and there are always strong players who control or take over it (see, for example, the 2024 WordPress controversy—The Verge).

4. Training Costs vs. Ongoing Costs

High upfront training costs for AI models often contrast with the relatively lower ongoing operational expenses. Balancing these expenditures is critical for sustainable AI innovation and for enabling smaller players to compete in the industry.

5. Foundational Models vs. User Applications

The tension between developing foundational AI models and focusing on user-specific applications underscores the need to align broad capabilities with practical, real-world use cases. Striking this balance is essential for maximizing both scalability and usability.

Conclusion: The Power of the Bubble

Once again, we observe a pattern similar to previous instances, such as the rise of trains in Europe during the 1840s (Wikipedia) and the advent of the Internet around 2000 (Wikipedia). Techno-economic bubbles lead to a significant influx of money into the market, resulting in considerable waste.

However, this influx of funds ultimately gives rise to entirely new economies. When strong, competitive players emerge, we all benefit from better, more cost-effective solutions.

2. Focused Spark: More about DeepSeek

Source: BBC

The Chinese AI startup DeepSeek, launched in 2023, released an AI assistant app on January 10, 2025. The app quickly climbed to the top of the U.S. Apple App Store’s free app rankings, surpassing ChatGPT. This success was fueled by DeepSeek’s DeepSeek-R1 model, which rivals GPT-4 in performance but was developed at a significantly lower cost ($6 million vs. $100 million). The app’s popularity triggered a sharp decline in major U.S. tech stocks, with Nvidia’s value dropping by over $460 billion. Despite its success, DeepSeek faces criticism for censorship practices and data privacy concerns, as user data is stored in China. Additionally, the company has temporarily suspended new user registrations due to cyberattacks.

3.  Focused Spark: More about StarGate 

Source: Conor Grennan

Guest post by Chief AI Architect, NYU Stern School of Business | NY Times and #1 Int’l bestselling author | CEO and Founder, AI Mindset (Consulting/Training) | Board Member, SHRM Foundation

Three tech giants – backed by the new president – are joining forces on a colossal AI infrastructure project called “Stargate” to be built in Texas – construction has already started. (Oracle stock jumped 7% on the news, with other AI-related stocks like NVIDIA and ARM also up.)

Five Things to Know:

  1. Scale and Investment

The project started with an immediate investment of $100 billion, expanding to $500 billion over four years. The first major data center is under construction in Texas, with more locations planned across multiple states.

  1. Main Players

SoftBank handles the money, while OpenAI runs operations. Microsoft, NVIDIA, ARM, and Oracle provide technical expertise. Sam Altman will lead for OpenAI, Ellison will build the data centers and Masayoshi Son of SoftBank will be the chairman.

  1. Economic Impact

The initiative is intended to create 100,000 new US jobs in AI and technology. With the spreading out and building of these data centers across different states, the idea is to create technology hubs and infrastructure all over the place.

  1. Technical Focus

The project is designed, as you can imagine – to deal with computing power shortages for AI development through new data centers, energy resources, and chip manufacturing capabilities.

Oracle, NVIDIA, and OpenAI will collaborate on building and operating the computing systems.

  1. Policy Changes

Trump seems to have reversed the 2023 AI executive order that required companies to share safety results with the government. The new approach is looking to prioritize rapid development with fewer restrictions. Companies gotta love that.

What This Means:

For OpenAI — They gain HUGE new computing resources while maintaining their existing Microsoft partnership. OpenAI will both operate Stargate and continue using Microsoft Azure.

For Tech Companies — Major players like NVIDIA, ARM, and Oracle secure long-term contracts and partnerships for AI infrastructure development.

For Government — The U.S. is clearly looking to establish domestic AI infrastructure to compete with other nations, particularly China while shifting toward lighter regulation. This is a critical time.

For Medical Research — The sheer compute enables faster processing of medical data for disease detection and vaccine development.

For AI Development — The massive increase in infrastructure should, in theory, help remove or alleviate current technical limitations on AI progress -that’s the hope.

4. Focused Spark: DeepSeek Privacy

Source:DeepSeek

DeepSeek’s Privacy Policy (updated Dec. 5, 2024) details data collection from user inputs, devices, and third parties, storing all data on servers in China. The company uses this information for service operation, security, and personalization. Users have the right to access, correct, or delete their data.

For more information 

5.  Curated Spark: AI MindLi Resources 

Source: DigitalRosh

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About Leadership CONNECT

MindLi CONNECT, is a weekly source of news and inspiration for thinking aimed at DigitalRosh members and MindLi users. 

In every issue, you will find curated content from different industries. It would take you about 10 minutes reading to get a brief overview of the presented topics.

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Enjoy!

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