Chinese AI Firm DeepSeek Triggers a Wide U.S. Policy Response

Policymakers and technologists have expressed concern that DeepSeek, a Chinese AI company with connections to the Chinese Communist Party (CCP) and the potential to share user data with China Mobile, could be putting U.S. companies and national security at risk. Policymakers have proposed a range of responses to DeepSeek, many of which are notable because they could more broadly impact AI policy.

China Mobile, a state-owned telecommunications company and one of China’s leading mobile phone providers, holds code that is part of the login process for DeepSeek. The code within DeepSeek’s chatbot holds heavily obfuscated scripts that, when deciphered, reveal a connection to computer infrastructure owned by China Mobile. First discoveries of data transmission from DeepSeek to China Mobile servers were uncovered by Feroot, a Canadian cybersecurity company.

Security concerns prompted policymakers and stakeholders to widely discuss how to approach DeepSeek and the January release of its model, DeepSeek R1. The reactions from Congress and the Administration reflect current policy debates about AI, national security, and economic competitiveness, the outcomes of which could affect many parts of the economy and the landscape of U.S. innovation.

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Critics say that DeepSeek users may be unknowingly exposing sensitive and proprietary information – ranging from financial records to contracts and documents – raising privacy and national security concerns. U.S. officials have expressed concern that if this data falls into the wrong hands, it could become a valuable asset for the CCP, given its history of exploiting such intelligence.

We have seen restrictions on government use. The U.S. government has taken steps to restrict DeepSeek. Several U.S. federal agencies, including NASA, the Pentagon, and the Navy, have prohibited its use on government-issued devices. This mirrors previous actions involving other Chinese apps, like TikTok, and reflects ongoing concerns about data security and the potential for espionage. There have been calls for states to follow suit. On March 3, 2025, Representatives Darin LaHood (R-IL) and Josh Gottheimer (D-NJ) sent letters to U.S governors requesting the ban of DeepSeek on government-issued devices. Several states have made such moves, with Virginia, Texas, and New York banning its use on government systems.

There are calls for broader federal regulation with export controls and new federal contract mandates. The House Select Committee on the CCP has been vocal about its concerns about DeepSeek and has called for federal regulatory action. Committee Chairman John Moolenaar and Ranking Member Raja Krishnamoorthi sent a strongly worded letter to President Trump’s National Security Advisor Michael Waltz, asking the Administration to consider the possible national security benefits of placing export controls on Nvidia’s H20 and similar chips, arguing for the importance of preventing PRC AI systems from gaining market share in the United States. The Select Committee also suggested “updating Federal Acquisition Regulations (FAR) to prohibit the federal government from acquiring AI systems based on PRC models such as DeepSeek, except for appropriate intelligence and research purposes.” In recent years, procurement regulations have become a powerful tool to try to shape technology choices and supply chains. Procurement limits, in the form of new contract clauses or certifications, can impact companies across the economy and should be monitored and closely evaluated.

Congress has also been considering legislative action. In addition to procurement, the House Foreign Affairs Committee raised concerns about violations of U.S. export control laws, in light of the possibility that China was able to access Nvidia’s H100 restricted chips through third countries, and the Committee is exploring mechanisms to better deter export control violations and augment enforcement. China’s advancements in DeepSeek have also raised broad concerns in Congress about China’s technological progress and the speed by which it is able to innovate.

Accordingly, legislative proposals have been introduced to address various risks, codify certain of the restrictions mentioned above, and more broadly regulate AI and critical technologies. A few examples highlight the breadth of activity:

• R. 1121 – No DeepSeek on Government Devices Act: Representatives Gottheimer and LaHood introduced the bipartisan “No DeepSeek on Government Devices Act,” which would prohibit the use of DeepSeek by federal employees on government-issued devices.
• R. 1122 - China Technology Transfer Control Act: This bill, introduced by Rep. Mark Green (R-TN) instructs the President to “regulate the export, re-export, or transfer” to China of any “covered national interest technology or intellectual property” that falls under U.S. jurisdiction or is exported by any U.S. individual.
• 321: Decoupling Artificial Intelligence Capabilities from China Act: Senator Josh Hawley (R-MO) introduced the "Decoupling America’s Artificial Intelligence Capabilities from China Act" on January 29, 2025, to protect U.S. AI development from China.

This level of activity demonstrates the serious concerns raised by DeepSeek’s model, and the bipartisan interest in technology and supply chain policy generally. It also comes against a backdrop of emphasizing support for AI innovation.

The President has made clear the importance of AI to economic and national security. One of President Trump’s early tech policy moves was to sign Executive Order 14179 “Removing Barriers to American Leadership in Artificial Intelligence.” The Executive Order announced that it is the “policy of the United States to sustain and enhance America's global AI dominance in order to promote human flourishing, economic competitiveness, and national security.” The Order revokes a significant amount of AI policies from the last Administration, and establishes a timeline in the Administration of 180 days to develop an action plan to achieve that policy goal. It is clear that the Trump Administration will prioritize innovation in AI, while balancing concerns about national security and global competitiveness.

Looking ahead, the response to DeepSeek provides opportunities for engagement. Innovators and users of AI should prioritize tracking the rapidly evolving regulatory landscape, as policymakers consider responses to DeepSeek and geopolitical economic competition. Some export control regulations that have been introduced by the Executive branch since the DeepSeek revelation have been criticized as potential overreach by the U.S. government. There is always a risk of over-correction, as it is challenging to develop regulatory programs that can precisely target one country, company, or product without impacting others. AI innovators should track congressional activity and regulatory proposals to help policymakers strike the right balance in legislation and agency rulemaking. And AI users including companies should heed government warnings and consider whether to adjust their AI governance to account for risks associated with specific models.

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Wiley’s Artificial Intelligence; National Security and Privacy, Cyber & Data Governance practices counsel clients on AI compliance, risk management, and regulatory and policy approaches, and we engage with key government stakeholders in this quickly moving area. We help clients shape and adapt to AI policy priorities throughout the federal and state governments. Please reach out to the authors with any questions.

Rachel Ann Hungate, a Practice Assistant in Wiley’s Telecom, Media & Technology Practice, contributed to this post.