A wake-up call for Silicon Valley

China’s DeepSeek AI challenges Silicon Valley’s dominance, highlighting the risks of monopolies and the need for stronger competition policies.

Photo by Frank Rumpenhorst

By Alana Salsabila

When Chinese artificial intelligence firm DeepSeek unveiled its groundbreaking AI model, it sent shockwaves through both Silicon Valley and Wall Street. Venture capitalist Marc Andreessen even called it “AI’s Sputnik moment,” drawing a parallel to the Soviet Union’s launch of Sputnik in 1957, which spurred the United States into a technological race that led to the creation of NASA. But unlike the space race, where the US responded with government-led innovation, Andreessen’s vision is different—he wants the US government to flood private industry with capital to ensure America retains its technological and economic edge.

However, from an antitrust perspective, DeepSeek’s breakthrough signals something more troubling. Rather than a Sputnik moment, it serves as a canary in the coal mine, warning that a lack of competition has made the US tech industry vulnerable. Despite massive resources, computing power, and government support, America’s leading AI firms have been caught off guard, proving that monopolization stifles innovation instead of strengthening it.

The illusion of US tech dominance

For years, Silicon Valley’s biggest firms—Google, Microsoft, OpenAI, and others—have argued that cutting-edge AI development requires enormous investment, computing power, and exclusive access to the best chips and data. They have used this argument to justify government policies that protect them from competition. However, DeepSeek’s rise challenges that narrative.

Despite US bans on selling advanced chips to Chinese firms, DeepSeek has managed to develop a powerful AI model without the same level of resources as its American competitors. This raises serious questions: If US tech giants are truly the best in AI, why have they been so easily challenged? If monopolistic dominance was necessary for innovation, wouldn’t these companies be years ahead of China rather than scrambling to respond?

The reality is that monopolies don’t foster innovation—they suppress it. After transforming the digital economy in the 2000s, companies like Google, Apple, and Amazon focused more on buying out rivals than on groundbreaking technological advances. Their leaders have shifted their strategies based on political and market trends rather than pushing the boundaries of what AI can achieve.

The danger of treating tech monopolies as national champions

Historically, the US government has sometimes allowed companies to function as de facto national champions, treating them as essential to American interests. This approach, however, has often backfired. Boeing, once considered an untouchable leader in aerospace, was allowed to acquire its last major US rival, McDonnell Douglas, in 1997. This consolidation weakened Boeing’s internal culture, leading to a series of safety and quality failures that ultimately damaged its global standing.

In contrast, aggressive antitrust enforcement in the past has fueled innovation. The US government’s legal actions against AT&T, IBM, and Microsoft from the 1970s through the 1990s created conditions that allowed Silicon Valley to thrive. By breaking up monopolistic control, these measures encouraged competition, leading to the rise of new players and technological revolutions.

Monopolies may occasionally deliver progress, but transformative breakthroughs often come from disruptors—smaller firms that challenge the status quo. Large corporations, focused on protecting their existing business models, rarely take the risks necessary for true innovation.

How monopolization slows AI progress

The development of AI itself highlights this trend. In 2017, Google researchers pioneered the Transformer architecture, which became the foundation for modern AI models, including ChatGPT. Yet, instead of fully capitalizing on this breakthrough, Google hesitated. The real advancements came when former employees left to form independent AI startups, proving that innovation flourishes in environments where new ideas are not controlled by a single entity.

At the Federal Trade Commission, a key argument has been that AI developers should release enough information about their models to allow smaller companies to compete. Allowing a handful of firms to dictate pricing, access, and innovation restricts progress rather than accelerating it.

Yet, as DeepSeek’s advancements gain global attention, US tech giants are likely to renew their calls for government protection. They may lobby for policies that limit competition under the guise of national security, argue for relaxed regulatory oversight, or seek approval for acquisitions that further entrench their dominance.

Competition, not protectionism

US policymakers must resist the urge to shield monopolies in the name of technological leadership. Under both the Trump and Biden administrations, antitrust enforcers have launched significant cases against dominant tech firms, arguing that their monopolistic practices have stifled innovation. Abandoning these efforts now would be a mistake.

If the United States truly wants to stay ahead in AI, it must foster competition, not consolidation. The best way to ensure technological leadership isn’t through government protection of monopolies, but by allowing new challengers to emerge. DeepSeek’s rise is a reminder that innovation thrives in open, competitive markets—not in industries controlled by a handful of entrenched giants.