DeepSeek vs ChatGPT and the tech stock market crash: How law students can analyse commercial news stories

Commercial Awareness Update – W/C 3rd February 2025

February 3, 2025

Prospect v Evans [2024] EWHC 1533 (KB)

February 8, 2025

Published by Sammar Masood at February 6, 2025

Deepseek vs ChatGPT

Tech stocks lost over a trillion dollars on Monday after a Chinese company launched an open-source AI model called Deepseek. Deepseek was founded in 2023 by Chinese entrepreneur Liang Wenfeng. It is funded by profits from his hedge fund, High-Flyer Capital (which uses AI to predict stock performance). Deepseek was made at a fraction of the cost of its rivals, and it became the most downloaded free app in the US just a week after it was launched.

The Chinese lab behind the model, known as R1, says it developed DeepSeek in just two months for under $6 million. Whereas its rival, OpenAI/ChatGPT, cost $600 million to train.

Liang Wenfeng, the founder of DeepSeek, built up a store of Nvidia A100 chips before they were banned from export to China, using those to launch DeepSeek. He was then able to use the A100s in combination with lower-power, unsanctioned chips.

What happened after DeepSeek’s release in the market?

Tech Stock Market Crash: A Wake-Up Call. The launch of DeepSeek led Nvidia, the world’s leading chip maker, to lose $600 billion/£432billion in market value on Monday. Nvidia was not the only stock; other big stocks such as Meta, Google, and Microsoft also saw their share prices drop on Monday. Nvidia has climbed 6% today, but it is still far from recovering the value it lost on Monday, which was the biggest single-day loss in Wall Street history. This event underscores the volatility of the AI industry and the impact that disruptive innovation can have on market stability.

Legal Issues:

DeepSeek must comply with the GDPR (General Data Protection Regulation) when processing data from Europe. However, they do not mention the GDPR in their privacy policy, which is an issue. DeepSeek could ensure compliance by appointing an EU representative.

Not only that, Deepseek also raises concerns about compliance with the EU AI Act, especially regarding data protection and intellectual property. Transparency is needed about how training data is sourced by DeepSeek to avoid violations such as unauthorised use of personal data or copyright material. Microsoft and OpenAI are currently investigating DeepSeek for secretly tapping into OpenAI’s data.

Impact on Law Firms:

Deepseek is currently new and not covered by current data protection rules in Europe nor by national security data laws in the US. This means law firms will need to be careful if they plan to utilise these in the legal industry.

DeepSeek’s low manufacturing cost shows legal tech does not have to cost millions to be developed. DeepSeek’s open-source approach could make it cheaper to build AI legal tools, sparking innovation and allowing smaller players to enter the market.

For law firms, this volatility serves as a reminder of the importance of staying ahead of technological trends and understanding their broader economic implications. Firms that advise tech companies or invest in AI-driven legal tech must be prepared to navigate such market fluctuations.

Why is it important to keep up with commercial awareness?

In law firm interviews, you might be asked how current challenges or opportunities could impact the legal sector or the law firm. Then you might be asked how the law firm can prepare for these challenges and opportunities.

Example: how might the rise of low-cost AI models like DeepSeek impact the legal industry?

When reading commercial awareness, remember to use the SWOT analysis and PESTLE analysis:

SWOT: Strengths and weaknesses (internal factors), opportunities and threats (external factors affecting the firm)

PESTLE ANALYSIS: This tool evaluates external factors in six categories: Political, Economic, Social, Technology, Legal and Environment. PESTLE comes under the opportunities and threats section of the SWOT analysis.

Example of SWOT analysis and PESTLE analysis on DeepSeek:

Strengths	Weaknesses	Opportunities	Threats
Cost-effective AI -very cheap	Data privacy issues	Lower-cost AI tools could spark innovation in many sectors, especially legal tech.	Increase in intellectual property disputes such as Open AI investigation as mentioned above
	Ethical concerns regarding data sourcing		Competition from other AI models such as ChatGPT.

Factors	Impact on the legal industry
Political	Government regulating AI and data issues
Economic	AI’s influence on legal market costs and general impact on the stock market.
Social	Growing demand for AI-driven solutions in many industries.
Technological	Advancements in AI
Legal	Compliance with GDPR, EU AI Act etc.
Environmental	AI power consumption leads to sustainability concerns.

How can students/individuals keep up with commercial awareness?

Follow news and read articles on websites such as BBC News, Guardian, etc.
Attend webinars and conferences that focus on legal and commercial trends.
Sign up for free newsletters with The Student Lawyer, Law Careers.Net, Zip Law, and Little Law.
Listen to podcasts such as Watson’s Daily Business (commercial awareness) and Financial Times (news briefing or unhedged).

Sources used:

BBC News – DeepSeek vs ChatGPT

Shoosmiths – DeepSeek and its Legal Implications

Euro news – Italian Data Privacy Agency Investigates DeepSeek

Article written by Amanpreet Singh, Birmingham City University LLB graduate and current LLM student at the University of Birmingham.