The nonpartisan Washington, D.C.-based think tank, started in 2006 by former Secretary of State John Kerry and former Defense Secretary Chuck Hagel, found DeepSeek is deeply intertwined with the CCP through “state-owned enterprises, military-linked technology suppliers and official state media narratives.”

The report’s findings, shared first with the Washington Examiner, raise national security concerns as DeepSeek tops app download charts and caused U.S. tech stocks to plummet. 

“These CCP connections are extensive and publicly known, at least in China. Despite this, nearly all the political attention on DeepSeek assumes that China’s AI sector works like it does in the U.S.,” Courtney Manning, director of AI Imperative 2030 at the American Security Project, said in a statement to the Washington Examiner. 

DeepSeek sent shockwaves through markets after the company said it had spent just $5.6 million on computing power for its base model, a fraction of the cost of OpenAI’s, Meta, or Google’s popular AI models. However, the American Security Project found DeepSeek is peddling fiction.

“DeepSeek’s narrative as a scrappy startup matching the output and sophistication of American AI for less money is a carefully constructed myth. It was a failing company before Chinese agencies, military contractors, and state-owned enterprises injected massive financial investments, subsidies, hardware, digital infrastructure, and other support into it,” Manning added. 

The report found numerous state-backed investments, including China’s State-owned Assets Supervision and Administration Commission which has played a key role in allocating the CCP’s $912 billion investment in startups “aligned with China’s national AI strategy.”  High-Flyer Capital, the parent company of DeepSeek, received a National High-Tech Enterprise designation in December 2023, securing tax breaks and government-backed funding for AI research and development. 

Two companies linked to SASAC provided early financing to DeepSeek. However, official disclosures obscure state-backed investments and the two companies do not appear in High-Flyer’s shareholder reports. 

The report also reveals national security concerns, pointing out that the technology’s cloud computing is supplied by Inspur, a tech firm designated by the Department of Defense as a “Chinese military company” operating in the United States.

An infrastructure provider for the company is directly controlled by the Wuhan SASAC and servers have been supplied by Sugon, a company sanctioned by the U.S. in June 2019 for supporting Chinese military and state security operations. In addition, the company’s industry partners have ties with the “People’s Liberation Army (PLA), state security agencies and CCP cybersecurity initiatives,” one of which, iFlyTek, was sanctioned by the U.S. last year for being involved in state surveillance programs.

The American Security Project points to the CCP elevating DeepSeek as a “nationalist success story” promoting the company in an effort to send a message that U.S. sanctions are not hurting China’s technological prowess. Since 2022, the U.S. has targeted China’s access to the sale of advanced chips and chip components. 

As the battle for tech supremacy between the United States and China heats up, lawmakers are growing more concerned that the application could be providing user information to the Chinese government. Security researchers recently found DeepSeek’s chatbot has computer code that could send some sensitive information to a Chinese state-owned telecommunications company that has been banned by the Federal Communications Commission for use in the U.S., according to a recent report from the Associated Press. 

A bipartisan pair of lawmakers on Thursday introduced legislation to ban DeepSeek’s AI software from government-owned devices. The bill, introduced by Reps. Darin LaHood (R-IL) and Josh Gottheimer (D-NJ) called “No DeepSeek on Government Devices Act,” and it would require the Office of Management and Budget to develop guidelines within 60 days for the removal of DeepSeek from federal technologies, with exceptions for law enforcement and national security-related activity. The legislation is similar to a previous one that banned TikTok from government devices. 

In 2022, federal and state government agencies began banning the use of TikTok on official devices. ByteDance, the parent company of Tiktok, now has fewer than 60 days to sell the app before it’s banned in the U.S. as a result of the law that passed last year and was extended by President Donald Trump in January. 

“The national security threat that DeepSeek—a CCP-affiliated company—poses to the United States is alarming. DeepSeek’s generative AI program acquires the data of U.S. users and stores the information for unidentified use by the CCP. Under no circumstances can we allow a CCP company to obtain sensitive government or personal data,” LaHood said in a statement on Thursday.

Gottheimer, one of the lawmakers behind the TikTok bill, called the risk of the CCP collecting sensitive data a “five-alarm national security fire.”

“We must get to the bottom of DeepSeek’s malign activities. We simply can’t risk the CCP infiltrating the devices of our government officials and jeopardizing our national security,” Gottheimer said. “We’ve seen China’s playbook before with TikTok, and we cannot allow it to happen again.”