DeepSeek’s R1 triggers a nationwide shift away from closed models
China is rapidly embracing open-source AI models, a move that analysts are calling the country’s “Android moment” for artificial intelligence. The shift has been catalyzed by DeepSeek’s R1 model, which combines high performance and low cost with a truly open-source license, prompting widespread adoption and challenging U.S. tech giants.
Experts say DeepSeek’s use of the MIT License—one of the most permissive open-source frameworks—has been crucial to its success. “R1 is actively reshaping China’s AI landscape,” said Wei Sun of Counterpoint Research, noting that companies like Baidu, Tencent and Alibaba are now following suit by open-sourcing their own models.
Baidu’s Ernie 4.5 and Ernie X1 are already available to individual users and will be fully open-source by June. Tencent and smaller players like ManusAI and Zhipu AI have also pledged to open more of their models, fueling what Zhipu calls the “Year of Open Source.”
“With DeepSeek free, it’s impossible for other Chinese competitors to charge,” said Ray Wang of Constellation Research. “They have to adopt open-source business models to stay relevant.”
In contrast, U.S. companies like OpenAI and Anthropic continue to guard their models behind closed walls, prompting skepticism over their high pricing and massive infrastructure costs. OpenAI, backed by Microsoft’s $13 billion investment, is reportedly facing $5 billion in annual losses.
The Chinese approach has significantly lowered entry costs and accelerated adoption. “This is enabling rapid innovation,” said Tim Wang of Monolith Management, who believes China has narrowed the AI gap with the U.S. from 24 months to just three to six months.
Still, some industry leaders downplay the U.S.-China framing. Alibaba’s Joe Tsai told CNBC that the real story is the empowerment of developers and companies through open-source access, not who has the most advanced model.
Key takeaway: Open-source AI is no longer a fringe concept — in China, it’s becoming the new standard.
