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In the latest move to regulate fast-rising artificial intelligence platforms, yesterday, on January 30th, Italy’s Data Protection Authority (the Garante) has banned the Chinese AI platform DeepSeek, ordering “as a matter of urgency and with immediate effect, the limitation on processing of Italian users’ data”. DeepSeek, which soared to the top of Apple’s and Google’s app stores in several markets, must now cease processing the personal data of Italian users while it is also under investigation, after responding to the Garante’s inquiries about data sharing, data storage, and GDPR compliance with content that “was deemed entirely unsatisfactory”. Ireland and Belgium have launched their own investigations, signaling that Europe’s scrutiny may broaden.

This is not the first time a popular AI has run into trouble in Italy. In early 2023, the Garante temporarily banned ChatGPT over privacy issues, eventually allowing it back, and publicizing in December 2024 that OpenAI would carry out a six-month information campaign and pay a fine of 15 million euro. DeepSeek’s ban reveals both the increasing willingness of regulators to clamp down on AI tools that may mishandle data and the legal gray areas that surround new technologies. Some Italians, however, have arguably already circumvented the ban through virtual private networks—highlighting how easily a “block” can be bypassed online.

DeepSeek: A Rising Star in AI

DeepSeek, a name most people have never heard of until last week, is a relatively unknown Chinese AI startup that has taken the tech industry by storm. Founded in May 2023 by hedge-fund and AI entrepreneur Liang Wenfeng, the startup operates independently but is funded by Wenfeng’s quantitative hedge fund, High-Flyer. This unique model frees DeepSeek from the pressure of outside investors and potentially enables the company to focus on long-term research.

In just a year and a half, DeepSeek has released models that can compete directly with those offered by companies such as OpenAI, Google, and Meta. Moreover, DeepSeek’s steep price cut sparked an immediate price war among China’s major tech firms like ByteDance, Tencent, Baidu, and Alibaba, catching the U.S. and broader AI community off guard. Until then, Silicon Valley had largely relied on high margins and premium pricing for inference services. DeepSeek’s secret lies in its cost-efficient architecture and framework, and it offers world-class AI performance at a fraction of the cost. U.S. tech giants, still unprepared for such rapid commoditization, now face growing pressure to cut their own prices or risk being displaced by an upstart whose low-cost model has not only reshaped the Chinese market but is poised to do the same globally..

Why Italy Banned DeepSeek

DeepSeek is very advanced, but it has run into serious privacy problems—especially over how it collects and stores user data. According to news reports, the U.S. Navy recently banned the DeepSeek app on “security and ethical” grounds,.due to “concerns associated with the model’s origin and usage.” Italian regulators share those concerns. The Garante is arguably investigating allegations about how user data is transferred and whether any of it is used to train its large-scale models without explicit consent.

Italy’s action resonates with the broader debate over whether regulators should ban or blacklist disruptive technologies. As scholars, such as myself and others have noted, banning imposes a legal prohibition—like what Italy just did—while blacklisting identifies and shames an entity, often isolating it in the global marketplace. In both cases— as Dr. Jabotinsky and I have argued in a research paper exploring this difference—regulators typically cite privacy, security, and ethical considerations.

Broader Implications for AI Policy

DeepSeek’s rapid downfall in Italy suggests a growing appetite among governments to act first and ask questions later. While consumer data protection is crucial, these swift bans can also trigger a chilling effect on AI innovation. Smaller startups may be hesitant to bring their models to market for fear of abrupt, business-ending prohibitions.

That said, the Garante’s move also underscores Europe’s heightened focus on data sovereignty and user rights. If DeepSeek can clarify its data practices and conform to GDPR standards, it may—like ChatGPT—return to the Italian market. But if it cannot, it risks being functionally shut out of one of the world’s largest economies, and could trigger a broader ripple effect.

For now, DeepSeek’s future in Italy—and possibly elsewhere in Europe—hangs in the balance. The outcome could shape how regulators approach cutting-edge AI developments. If DeepSeek successfully reemerges, it may serve as a blueprint for balancing innovation with robust data governance. If it cannot, it will join the ranks of foreign tech casualties in a fast-shifting privacy landscape.

Either way, DeepSeek’s story underscores that while regulation has traditionally lagged behind AI’s breakneck pace, regulators, in the U.S. and all over the world, are catching up faster than ever. Emerging players must decide whether they can meet evolving data protection mandates—because bans, once largely theoretical, are quickly becoming reality.

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