DeepSeek Pauses New User Sign-Ups Amid Rising Cyberattacks

In a most unprecedented move, Chinese AI startup DeepSeek has temporarily restricted new user sign-ups for its popular chatbot, DeepSeek-R1, to individuals with China-based phone numbers. This decision follows a series of large-scale cyberattacks that have disrupted its online services, coinciding with the rapid rise in its popularity as one of the most downloaded free apps on Apple's App Store, even surpassing DeepAI's ChatGPT briefly.

Founded in 2023 by hedge fund manager Liang Wenfeng, DeepSeek has quickly positioned itself as a formidable player in the AI arena. The launch of its flagship model, DeepSeek-R1, has generated considerable excitement, particularly due to its advanced capabilities in tasks such as mathematics, coding, and reasoning. Notably, DeepSeek claims to develop AI models at a fraction of the costs associated with comparable offerings from Silicon Valley giants like OpenAI and Google. This financial efficiency is increasingly critical as the global AI landscape becomes more intensely competitive, especially amid US restrictions on China's access to high-end AI chips.

The recent surge in demand for DeepSeek-R1 resulted in significant stress on its infrastructure, leading to "major outages" reported on the company's status page. On a single Monday, both its API and web chat services experienced severe disruptions, with users facing extended periods of unavailability. To mitigate the impact of ongoing cyberattacks, DeepSeek implemented the controversial measure of limiting new registrations to users with Chinese phone numbers. In a statement, the company justified this decision as a necessary step to ensure continued service amid a flurry of malicious attacks.

Interestingly, existing users were unaffected and could log in as usual. This approach suggests a tactical effort to shield its systems from external pressures while maintaining service continuity for its current user base. However, the restriction creates a divide between existing and potential users, raising ethical questions about accessibility in a field that thrives on widespread use and collaboration.

The rise of DeepSeek has not gone unnoticed by the broader tech ecosystem, having impacted stock prices significantly. On the same day that DeepSeek faced outages, Nvidia, a key supplier of AI chips, registered a staggering 14% drop in its shares, resulting in a loss of over $500 billion in market value. Similarly, other tech companies in both the US and Europe faced declines as investors reacted to DeepSeek's low-cost model, highlighting a potential pivot in market dynamics favoring cost-effective AI solutions.