China’s Advance In AI Gives U.S. Capitalism A Black Eye

Late last week, a little-known Chinese artificial intelligence (AI) startup called DeepSeek revealed that it had developed more advanced AI than America’s Big Tech companies—at a fraction of the cost—even without access to advanced U.S. chip technology, Robert Reich wrote in his Substack.

DeepSeek has made its technology “open source,” meaning it is available to everyone.

To add insult to injury, DeepSeek has made its technology “open source,” meaning it is available to everyone.

The lesson here is that Microsoft, Amazon, Meta, and Google have become too large, complacent, and bureaucratic to remain truly innovative. Rather than fostering groundbreaking innovation, they have focused on incremental improvements.

In contrast, Chinese tech corporations compete fiercely with one another, pushing them to the cutting edge of technological advancements. China’s success has not stemmed from massive government subsidies aimed at creating “national champions.”

Instead, it has resulted from intense competition.

Lina Khan, Biden’s chair of the Federal Trade Commission (FTC), who sued Big Tech for monopolizing the market, correctly pointed out last March that the U.S. cannot remain at the forefront of innovation by relying on monopolistic national champions.

The argument for protecting dominant tech firms is often framed as a necessity for maintaining American innovation and preventing China from taking the lead.

However, history and experience demonstrate that monopolistic corporations weighed down by bureaucracy and red tape fail to produce groundbreaking technological advancements.

Startups, driven by competition and necessity, are far more likely to generate true innovation.

To stay ahead globally, the U.S. must stop shielding monopolies from competition and instead safeguard innovation from monopolies, Reich argued. America must rethink its entire approach to technology—and perhaps even its approach to capitalism.