Forget the Super Bowl, the Real Monday Morning Quarterbacks are Targeting AI

Author: Dr. Andrea Little Limbago, SVP, Applied AI, interos.ai 

“DeepSeek R1 is AI’s Sputnik moment” claimed Marc Andreesen following their announcement of the open source reasoning model that rivals those made by Silicon Valley tech giants at a fraction of the compute.  

Last week, the Chinese startup launched an open source AI assistant that by Monday had become the number one downloaded app on Apple.  

Concerns over this breakthrough instigated a $1 Trillion loss in tech stock shares and have reignited the debate over closed versus open systems. 

Whether or not this is a Sputnik moment, there are many prognostications surrounding this release. While it is too early to know the long-term impact of this latest shock to the AI world, it is important to both take this breakthrough seriously while also not jumping to the wrong conclusions.  

The discourse is certainly going to evolve, but this is not the time for quick conclusions about strategic priorities that will shape the future of AI and geopolitics. 

  1. Stargate is not necessary: Many are wondering whether DeepSeek will ‘deep-six’ Stargate, President Trump’s $500 B AI project aimed at developing AI infrastructure in the US. For years, technological bifurcation – the splintering of the physical infrastructure that serves as the backbone of the digital world – has created a divergent system between Chinese backed technologies and those produced by the US and like-minded countries. Governments are moving toward greater data sovereignty and tech sovereignty under the auspices of national security. Stargate is a natural progression of this movement. Given recent attacks on physical infrastructure, including on ViaSat as well as underseas cables, maintaining tech sovereignty over the infrastructure that powers AI is part of the broader global splintering of the internet and technological infrastructure into technospheres. If anything, DeepSeek’s announcement will only deepen this growing divide. 
  2. Export controls don’t work: US export controls on the most sophisticated chips inadvertently sparked innovation by requiring Chinese companies to do more with less, or so the argument goes. Export controls will never be perfect, but that does not mean they may not be effective. The array of tech-related export controls have made it much harder for China to develop their own semiconductor industry, and perhaps is better compared to tech containment. Whether its enforcement challenges, or the notion that you can’t ban math – to pull from arguments over encryption bans in recent years – make AI technologies easier to circumvent than other emerging technologies. 
  3. Security as an afterthought: With record-breaking downloads, yet again we are witnessing the flight to new tech with security as an afterthought. Nevertheless, DeepSeek had to halt new registrants due to ‘large-scale malicious attacks’. The security risks not only pertain to DeepSeek, but rather include the broad range of attacks, from data poisoning to model corruption. But wait, there’s more. China’s data policies enable the government to access data from companies located in China. Furthermore, given the tight connection between the government and companies, it is naïve to assume complete separation of the Chinese government from DeepSeek going forward, including manipulation and backdoors. 
  4. Authoritarian regimes have the innovation edge in AI: While this has not been a prime take-away this week, there has been a growing debate about which regime type has the AI edge, largely based on the greater access to all kinds of data by authoritarian regimes. However, it ignores the censorship and propaganda that can poison the AI models. Existing Chinese GenAI models have already demonstrated censorship and disinformation, and initial research shows DeepSeek’s AI suffers the same problem. Garbage in, garbage out may give democracies the edge, including in reasoning models. 

 

Over a decade ago, Edward Snowden’s revelations helped deepen the divide between Silicon Valley and DC. DeepSeek may finally be the impetus that brings the two group together. Is this the spark that rejuvenates the close allegiance between the tech sector and the US government, similar to Hewlett Packer, Texas Instruments, and IBM from the early days of the Cold War?  

Will the AI-focused export controls passed earlier this month target DeepSeek before it becomes a TikTok regulatory problem? If so, how will China retaliate?  

The only certainty is that we are still in the early days of this generation-defining technology. AI is more than the technology, but must be viewed through the regulatory, national security, and social systems lens in which it is deeply intertwined. 

Go Deeper:  What’s in Store for 2025 

You can view our take on the 5 trends to look out for in 2025 in our latest report, including our breakdown on the need for Secure AI and the larger Bifurcation of technology along geopolitical fault lines:   

Interim Final Rule on Artificial Intelligence Diffusion

Author: Dr. Andrea Little Limbago, SVP, Applied AI, interos.ai 

To kick off the New Year, Russian President Vladimir Putin ordered the Russian government and its major bank to coordinate AI development with China. This announcement followed a similar one a few weeks earlier wherein Russia highlighted collaboration among the BRICs (Brazil, Russia, India, and China) and South Africa for an AI alliance.  

These announcements, in turn, coincide with a steady drumbeat of AI-driven techno-alliances among the US and its allies, including those between the EU and US, within the QUAD, as well as adjacent policies such as the CHIPs Act and the US AI Executive Order.  

Yesterday’s Interim Final Rule on Artificial Intelligence Diffusion is the latest global policy aimed at technological diffusion within allies, which continues to deepen the growing technological bifurcation and upend global supply chains. In the race to implement AI, organizations must stay atop the global technospheres of influence, which will continue to reshape corporate technology stacks or else introduce new security and regulatory risks. 

Summary of Bifurcation 

The latest wave of AI-focused, technology alliances is a continuation of a pattern that has been going on for years. Technospheres of influence have emerged, wherein part of the world is building upon largely Chinese-created technology infrastructures, and other parts on those built by US and allies.  

The US-China trade war initially instigated the nascent splintering almost a decade ago and was followed by US and European export controls and sanctions targeting thousands of companies in China and Russia. China, in turn, has an Unreliable Entity List, which saw the most recent additions on January 2 with the announcement of the addition of ten US defense companies. 

These policies have accelerated, both with the increase of geopolitical tensions, but also due to the growing awareness of sanctions circumvention and the use of US-created technology by Russia against Ukraine.  

Both the EU and US have specifically targeted distinct rounds of sanctions with anti-sanctions circumvention goals. The result, so far, has been a widening of geographic divisions of technology stacks dependent on geographic location and geopolitical alliances. 

Potential Impact 

This latest Interim Rule targets foundational AI technologies, including automatic data processing machines, electronic integrated circuits, semiconductors, and calculating machines. The Interim Rule specifically encourages the exchange and research collaboration in these product areas with 18 allies, while restricting their access to ‘non-trusted actors’, a consistent thread among the series of other US AI-related policies over recent years. 

Interos.ai identified over 27,000 companies in the US who export these four very specific product categories. These companies, in turn, have global footprints across non-trusted countries and allies alike, as detailed in the table below. Over 20% of companies buying directly from these US companies are in Mexico, followed by India, Great Britain, Colombia, and Canada.  

China is among the top 12 direct customers producing one of these products: automatic data processing machines, electronic integrated circuits, semiconductors, and calculating machines. Under the Interim Rule it is assumed that these products could be used in AI technologies.  

As you see in the table above, there are thousands of companies who purchase the four product areas listed above. Over 650 of these are in countries of concern, such as China, Russia, and Iran, which exceeds one thousand when looking into the third tier. Meanwhile, almost 4,000 companies are among the 18 allied countries listed in the Interim Rule, and over 3,700 tier 3 companies.  

This highlights both the risks and opportunities for companies in complying with the Interim Rule, wherein sizable mats already exist for expansion among like-minded democracies. At the same time, this also illustrates the increasing challenge of doing business in at-risk or adversarial countries.  

While these numbers focus on very small, niche product categories, they often are components of much bigger and broader product technology ecosystems.  

To that end, when looking at the US tech industry writ large, interos.ai data reveals almost 575,000 companies globally that are directly supplied by a company in the US tech industry. The biggest direct importers from the US technology industry are concentrated in the United Kingdom, India, Australia, Canada, and Mexico.  

US AI Policy in Transition 

As we noted last Fall, AI governance is critical for shaping the global rules of the road when it comes to AI development, deployment, safety, and security. The EU released the first comprehensive AI policy last year, while the Executive Order and Blueprint for the AI Bill of Rights are the most comprehensive frameworks from the US, but lack the regulatory teeth. 

 In addition, as often occurs with leadership transitions, there is uncertainty surrounding how the next administration will approach AI. The AI Executive Order is expected to encounter additional scrutiny, with potentially getting repealed based on comments made by the incoming Trump administration. However, based on an AI executive order late in 2020, there are likely areas of continuity as well, indicating that AI policy will remain a moving target. 

Geopolitical Tensions will be Central to the Shifting AI Regulatory Landscape in 2025 

Given the fast pace and broad impact of AI, the only certainty around the global AI regulatory landscape is that there will continue to be shifts and changes, with geopolitical considerations central to these changes. While the new Interim Rule is the latest example of AI-driven governance updates, it will not be the last.   

The geopolitical landscape will continue to drive technological bifurcation, creating distinct technospheres of influence among the US and allies in contrast to China and like-minded regimes. 

In addition, we can expect to see changes in AI policies focused on enhancing the underlying security and safety fundamentals of AI.  AI security concerns are likely to come front and center in 2025.  

On the security front, these will focus on minimizing adversarial AI, including prompt injection attacks, data poisoning, and model manipulation. There also are safety concerns, and we can expect the use cases of specific AI to drive regulatory practices, with higher safety use cases attracting greater regulatory oversight compared to low risk use cases. 

The first two weeks of 2025 have already proven eventful for the global AI regulatory landscape. With AI proving to be a generational technology, not only is technological innovation critical, but so too are the governing frameworks surrounding it.  

interos.ai views secure AI as a growing and critical consideration for supply chain, full of both opportunities and challenges. We work closely with our customers, supporting their AI governance frameworks and serving as strategic partners to guide AI governance decisions. 

To learn more about it and other major trends for 2025, download the interos.ai 2025 Predictions Report. 

5 Supply Chain Predictions You Need to Know in 2025

2024 was a transformative year – reshaping how we view supply chain risk. Supply chains make the world go round – and can also bring it to a screeching halt.  

Specifically, we saw the nonreversible merging of the physical and digital supply chain.  

Supply chains are not simply the shipping of goods but the underpinning of sharing information. No one will forget how the Crowdstrike outage grounded flights, locked banking transactions and impeded business operations – showing it’s not just a physical supply chain that we need to be concerned with, or how the Hezbollah device attacks showed a sophisticated weaponization of the physical supply chain, signaling a new era of modern warfare.  

interos.ai’s inaugural Predictions Report walks through key highlights from 2024 as well as  markers to be on the lookout for as we move into 2025. 

Geopolitical 

2024 was the year of democracy – there were over 80 elections globally, and half of the world’s population voted bringing global election security to the forefront of cybersecurity and disinformation professionals, worldwide.  

US Sanctions ramped up with more entities being added by the U.S. Department of Homeland Security ‘s Uyghur Forced Labor Prevention Act (UFLPA) entity list, bringing the total to over 100 organizations and more than $3.4 billion worth of goods being reviewed in two years. Separately, though just as significant, the Office of Foreign Assets Control (OFAC) sanctioned the last of the top three Russian financial institutions as part of the U.S. efforts to aid Ukraine in the Russia-Ukraine war.  

Trade, Ports and Labor Strikes 

Labor strikes loomed in Canada, India and the US, with talks resuming for the International Longshoreman’s Association (ILA) in 2025. 40% of goods traded to the U.S. on any given day go through ILA controlled ports with trade increasing 25x since the last full ILA strike in 1977. The economic fallout of a full labor strike could be catastrophic.  

The Baltimore bridge collapse added significant cost and congestion to the automobile, energy and manufacturing sectors as imports were diverted to other ports. Baltimore is the top port in the nation for automobile shipments and a crucial hub for coal exports. 

The ripple effects of damage to just one U.S. port shows the fragility of supply chains and underscores the need for proactive risk management.  

Climate-Induced Supply Chain Disruptions 

Historic storms Hurricane Helene and Milton bore down on the U.S. in 2024 impacting core manufacturing, aerospace, agriculture and medical industries with extended supply chains comprised of over 2 million businesses.  

Supply chains have seen the competitive rise of ESG and sustainability. Global legislation is requiring organizations to focus on ethical and environmental practices or face steep fines and reputational damage. The impending EU’s Deforestation Regulation has upped the ante for businesses to have visibility and eliminate ties to risky products in their supply chains. Globally governments continue to mandate ESG and climate reporting, such as Australia’s recent legislation for climate-related financial disclosures.  

As we look ahead to 2025, two things are certain:  

  • Supply chains are the vast and sprawling connective tissue powering our economy 
  • Eliminating risks in supply chains is more than ad hoc risk management, it is a requirement for healthy business. 

Get your copy of the 2025 Supply Chain Predictions Report Today: