Microsoft Corp. and OpenAI are investigating whether data output from OpenAI’s technology was obtained in an unauthorized manner by a group linked to Chinese artificial intelligence startup DeepSeek,

DeepSeek is causing havoc throughout the AI industry. U.S.-based tech companies that have heavily invested in AI saw their stocks take a tumble this week after the China-based startup released a new AI model on par with OpenAI's latest model, yet much cheaper to train — plus, DeepSeek made it free and open source.

OpenAI believes DeepSeek used a process called “distillation,” which helps make smaller AI models perform better by learning from larger ones.

David Sacks says OpenAI has evidence that Chinese company DeepSeek used a technique called "distillation" to build a rival model.