The U.S. has ordered federal civilian agencies to stop purchasing services and products developed by Chinese AI startup DeepSeek and remove them from government IT systems over national security concerns tied to the Chinese AI startup’s operations in China, according to the Department of Homeland Security. The order goes beyond banning DeepSeek’s own product, but also covers third-party products and services built using DeepSeek technology, though agencies can request exceptions.
The DHS raised concerns about DeepSeek’s handling of user data, warning that sensitive information from US government users could potentially be accessible to Chinese authorities under Chinese law, the order said.
The move comes amid intensifying tech competition in AI between the US and China. The Chinese AI model challenges its U.S. rivals, including OpenAI and Meta, with low-cost open-weight models.
China pushed back against the U.S.’s move. Foreign Ministry spokesperson Mao Ning said Tuesday that Beijing opposes “overstretching the concept of national security and politicizing technology and trade issues,” according to an official briefing. “We will resolutely safeguard the legitimate rights and interests of Chinese enterprises,” the spokesperson added.
The U.S. has already taken steps to limit DeepSeek’s use in government. A law passed in December 2025 targeted its use in intelligence’s national security systems. The latest order extends the restrictions to federal civilian agencies, covering both new purchases and existing IT systems.
Meanwhile, China is reportedly considering export restrictions on 23 AI-related technologies, including chip designs and certain advanced AI models, to address security and misuse risks, Bloomberg reported last week.
The Chinese AI lab has faced scrutiny from governments and regulators across the globe since its R1 reasoning model shook the AI industry in January 2025, triggering a sharp sell-off in Nvidia shares.
The U.S. accused DeepSeek and five other Chinese AI companies, including Alibaba and Moonshot AI, of using large-scale model distillation to extract information from American AI systems, according to a September report.
In addition, OpenAI and Anthropic have separately raised concerns about DeepSeek’s alleged use of model distillation, a technique that uses outputs from one AI model to train another. Earlier this year, OpenAI told U.S. lawmakers it had observed suspected attempts by DeepSeek to distill its models, while Anthropic said it had identified unauthorized attempts by DeepSeek and other Chinese AI labs to collect outputs from Claude.
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Kate Park is a reporter at TechCrunch, with a focus on technology, startups and venture capital in Asia. She previously was a financial journalist at Mergermarket covering M&A, private equity and venture capital.