US government bans Chinese AI company DeepSeek that had wiped more than $1 trillion from Wall Street in less than 2 hours, from all civilian agency IT systems
Incidentally, DeepSeek is the same Chinese AI company whose low-cost artificial intelligence (AI) model sent shock waves in the US stock market in January 2025. Nvidia alone lost about 17% or close to $593 billion in market value, a record one-day loss for any company. The Department of Homeland Security (DHS) is publishing notice of the Secretary of Homeland Security’s issuance of an order (1) excluding information technology products and services developed by Hangzhou DeepSeek Artificial Intelligence Co, Ltd (DeepSeek), to include affiliated entities as defined in applicable regulations, from federal civilian agency procurements; and, (2) removing all DeepSeek and DeepSeek-affiliate products, and third-party products and services developed using DeepSeek implementations, from civilian agency information technology. Earlier this month, the Federal Communications Commission (FCC) said that it will vote on October 29 to bar all Chinese labs from testing electronic devices such as smartphones, cameras and computers for use in the US, widening a previous action targeting Beijing. In 2025, the FCC banned testing of US electronics by labs owned or controlled by the Chinese government, and several dozen labs were barred. FCC Chair Brendan Carr had then said that 82% of electronics were tested in China, which does not have an agreement with the US.
In an order, DHS said that DeepSeek models pose “multiple threat vectors” and raised concerns that use of the product “may result in the transfer of sensitive data to the PRC if used by US government employees or vendors. In its order, DHS also said that the use of DeepSeek by government agencies “could produce actionable intelligence on US persons and/or government agencies. In a memo passed in July this year, DHS told federal agencies to monitor flows of traffic in and out of government websites to address potential risks from DeepSeek. The selloff in the US stock market was prompted by the release of the free AI assistant from China’s DeepSeek that the startup said needed less data at a fraction of the cost of services from American technology companies. The FCC said it will prohibit test labs and certification bodies in countries including China that deny reciprocal treatment to US-based test labs. But the agency said this year that a substantial majority of China-based test labs were still testing US electronics. “Less than 4% of all electronic devices are tested in labs located inside the US,” Carr said, adding the FCC will “insist on fair and reciprocal treatment in international commerce.
The US Homeland Security Department has ordered the removal of products and third-party services of Chinese AI company Deepseek. In an order, DHS has banned US civilian agency IT systems from using any DeepSeek AI model. The US government is also banning acquisition of products and third-party services developed using DeepSeek technology by US civilian government agencies. The models themselves may contain malware or other security vulnerabilities. Multiple states including New York, Tennessee, and Virginia have taken similar steps. DeepSeek worries wiped over a trillion dollars from market value of some of the biggest US companies in semiconductor, power and infrastructure sectors. ” You use AI every day. Now get your AI Quotient. Take the AIQ test.
Previously, several US agencies, including the Department of Commerce and the Navy, have banned the use of DeepSeek on government devices.