In the era of artificial intelligence development, data has become a highly valuable resource. Data protection has become a crucial and sensitive issue in recent years. Therefore, countries are trying to protect this resource by implementing data protection policies, with South Korea being a notable example. However, Chinese artificial intelligence company DeepSeek has violated South Korea’s data protection policy, the Personal Information Protection Act (PIPA). On April 24, CNBC reported that South Korea’s data protection authority issued a statement saying that the artificial intelligence company had transferred data to several companies in China and the United States before the DeepSeek chatbot app was removed from South Korea’s app store in February. This case has drawn attention because it touches on a fundamental issue in the global technology ecosystem: trust in data security and ethical data management.
Decline in Consumer Trust
The latest version of DeepSeek’s AI, DeepSeek-R1, features cutting-edge innovations that outperform OpenAI at a lower cost. DeepSeek’s advantages with its innovations have become a unique attraction in the market and created a new strategy for China to compete with the United States’ monopoly in the artificial intelligence technology market (Zhang et al., 2025). However, DeepSeek’s high-value innovations are not accompanied by adequate data protection regulations. This shortcoming poses a potential obstacle to the global competitiveness of Chinese AI products because it causes consumer distrust in such AI services. Without strong data protection guarantees, technological superiority alone is insufficient to win the trust of globally aware consumers who increasingly prioritize the security of personal information.
Initially, South Korea’s data protection authority, the Personal Information Protection Commission (PIPC), requested DeepSeek to provide details on how its new product, the DeepSeek-R1 LLM AI chatbot, collects personal data, the legal basis for its processing, and whether user data is stored in China. The PIPC also investigated the AI service and found that there was unauthorized data transfer to third parties (PIPC, 2025). The discovery of a violation of PIPA Article 39-12 regarding cross-border data transfer regulations led to the suspension of DeepSeek and subsequently the ban on the use of DeepSeek AI on government digital devices, as well as the removal of DeepSeek from app stores. The ban signifies South Korea’s firm stance in enforcing data protection standards.
The ban on the use of Chinese digital companies’ artificial intelligence products is not limited to South Korea. Jin (2025) noted that previously, Italy, Taiwan, the United States, and Australia had imposed several bans on the use of DeepSeek artificial intelligence for data security reasons. The lack of transparency in DeepSeek’s management of consumer data has the potential to increase concerns about trust in Chinese digital technology, which relies on data input. If this issue is not addressed promptly, it is not unlikely that China could lose additional consumers in the artificial intelligence technology market. Although DeepSeek-R1 artificial intelligence technology has surpassed OpenAI in performance and cost, China will find it difficult to compete in the market if its sales are restricted by the regulations of consumer countries.
Previous Skepticism
Data security issues with DeepSeek’s artificial intelligence services are not the first case that could hinder China’s economic progress in the technology sector. Skepticism toward Chinese technology products and services is generally related to issues of intellectual property theft, potential espionage, and personal data protection. A real-world example that has fueled skepticism toward Chinese-made technology products is the admission by Hytera Communications, a Chinese company, of allegations that it stole radio technology from Motorola Solutions in the United States by hiring former employees of that company who had access to confidential technical data (Al-Yamani, 2025). Concerns about espionage have also led some countries to reject the adoption of Chinese technology infrastructure, such as 5G networks.
Persistent skepticism in many countries is often attributed to the close relationship between Chinese companies and their government. This public-private relationship has led to the assumption that data obtained by Chinese digital companies can also be used by the government of that country. In the context of the DeepSeek case, the illegal transfer of data to companies in the United States and China adds to the evidence that China has not yet met the standards of integrity expected by the global community. This suggests that openness, transparency, and the protection of individual rights have not been major priorities for many Chinese tech companies.
Inter-country Cooperation: Strained or Stable?
Data protection violations are not limited to Chinese companies. The United States has experienced similar issues. Cambridge Analytica, a British political consulting firm, collected personal data from Facebook users without adequate consent to meet regulatory standards in order to build psychographic profiles that were then used to target political advertisements. This sparked global outrage and widespread investigations in the United States, the United Kingdom, and other countries (Ur Rehman, 2019). The Facebook-Cambridge case is evidence that data protection violations are not exclusive to China. So, what will happen after such violations occur?
In the case of the United States, countries continue to use services from the United States due to the lack of adequate technological infrastructure substitutes. Therefore, countries that consume US technology services continue to cooperate and prefer to strengthen regulations and oversight rather than ban the use of US technology. However, China must be more cautious because there are companies from other countries that provide similar technology products with higher security standards.
From another perspective, it is important to understand that the countries that have currently blocked the use of DeepSeek technology and a number of other Chinese technologies are mostly close allies of the United States. The United States, Taiwan, Australia, and several European countries that are cautious are in strong political and security relations with the West. However, the world does not consist solely of these countries. Many countries in Asia, Africa, Latin America, and parts of Eastern Europe have much stronger economic ties with China than their political closeness to the United States. For these countries, the decision to continue collaborating with Chinese technology companies is driven more by pragmatic considerations, including the need for advanced technology at relatively lower costs, the speed of digital infrastructure development, and economic growth potential. Therefore, despite China’s poor reputation in some key markets, opportunities to maintain or even expand its global influence remain open. China’s success will depend on its ability to restore trust in these markets and demonstrate that it can provide reliable technology services, particularly artificial intelligence, regardless of existing geopolitical tensions.