DeepSeek’s AI innovations challenge traditional proprietary models and drive the growth of digital sovereignty and the public sector. This paper explores its implications for the GCC (Gulf Cooperation Council), highlighting the role of open source AI in transparency, efficiency, and economic resilience. Learn how Frost & Sullivan helps governments develop AI strategies and policies for long-term success.
Why is DeepSeek so popular?
DeepSeek is a Hangzhou-based Chinese artificial intelligence company founded in 2023 by quantitative hedge fund firm High-flyer. The company is focused on AI research and has been building open source large language models (LLMS) optimized for limited computing resources (a combination of NVIDIA H800 and Huawei Ascend 910C chips). Unlike the top proprietary models from leading companies such as OpenAI.Google and Anthropic,DeepSeek adopts an “efficiency first” strategy that relies on less energy and computing infrastructure. Although partially open source, Meta’s models are trained on large datasets in a closed environment. The efficient and high-performance model released by DeepSeek is comparable to the top artificial intelligence models in the United States, which not only shocked established players, but also triggered geopolitical competition between China and the United States. The competition is an updated version of the ongoing race for global AI supremacy.
Redefining AI innovation
While DeepSeek isn’t reinventing the wheel, it relies more on reinforcement learning (RL) and Hybrid expert (MoE) methods and effectively improves Chain of Thought (CoT) reasoning. It has been widely reported that DeepSeek has delivered its R1 inference model at a fraction of the cost of leading models (around $5.5 million), while companies such as OpenA1 and Anthropic have spent hundreds of millions of dollars on leading proprietary models. DeepSeek assuages concerns that generative AI development requires significant investments in computing infrastructure and energy resources. This could force the U.S. AI industry to rethink its investment strategy and move away from a scale-at-all-costs framework toward resource optimization for efficient innovation.
This critical moment presents an opportunity to redefine innovation in the public sector by investing in open source entry-intelligence capabilities based on autonomous, adaptive models such as DeepSeek. This strategic move will not only enhance digital sovereignty, but also unlock unprecedented value creation and position the GCC as a global AI leader.
Why open source AI? The case for digital sovereignty
Relying on proprietary AI systems from foreign vendors brings risks, limited transparency, reliance on external updates, and vulnerabilities in data governance. In contrast, open source AI frameworks like DeepSeek enable countries to control their technological destinies.
·Data security and compliance: The open source model enables governments to audit algorithms to ensure compliance with local regulations (such as the UAE Data law and Saudi NDMO standards). This mitigated the risk of third-party data exploitation.
·Customization: Open source models like the DeepSeek architecture allow customization based on Arabic nuances, cultural context, and industry-specific needs (e.g., healthcare, education, smart cities) to facilitate citizen-centric services.
·Cost-effectiveness: Eliminate licensing fees and reinvest the savings in a local AI talent pipeline, creating a self-sustaining ecosystem.
·Sustainability: Support sustainable AI development by utilizing energy efficient models and enabling reusability of AI resources.
For countries prioritizing economic resilience in their long-term visions, open source AI is a cornerstone of strategic autonomy.
Create value through the local ecosystem
Building open source AI is not just a technological endeavor, it is an economic catalyst.
·Talent development: Work with universities to train a new generation of Arab AI engineers to reduce reliance on foreign experts.
·Public-private partnerships: Support start-ups to develop solutions on sovereign AI platforms and foster innovative institutions such as fintech and logistics.
·Global leadership: Export AI tools developed in the UAE and Saudi Arabia to the MENA region and global Southern markets, positioning the GCC as an ethical, culturally aware AI hub.
DeepSeek's strategic advantage
DeepSeek’s architecture is aligned with GCC’s goals:
·Efficiency: Optimized for high performance and reduced computing costs, making it ideal for large-scale public sector adoption.
·Transparency: Open source code allows for scrutiny and fosters public trust in AI-driven governance.
·Interoperability: Integration with existing digital infrastructure, such as the UAE‘s “Government 4.0” platform, to maximize ROI.
To take advantage of this opportunity, the UAE and Saudi Arabia should:
· Launch the National AI Lab · Build in-house expertise to customize and maintain operations.
·Establish a governance framework: define standards for the ethical use of AI, data privacy, and cross-agency collaboration.
·Promote regional alliances: Promote knowledge sharing of best practices and tools among GCC countries to build a unified AI ecosystem.