DeepSeek and the China data question: Direct collection, open source and the limits of extraterritorial enforcement

One year after DeepSeek's R1 model triggered what Marc Andreessen called "AI's Sputnik moment," the regulatory dust has begun to settle — and the picture that emerges carries important implications for cross-border data flows and the reach of European data protection enforcement.

Together with Pankaj Raj, I have published a comprehensive study documenting the global regulatory reactions to DeepSeek over the past 12 months. The findings are sobering. Western regulators mounted an unprecedented enforcement mobilization — Italy's data protection authority, the Garante imposed a ban within 72 hours, investigations followed in 13 European jurisdictions, the European Data Protection Board created a dedicated AI Enforcement Task Force, and government device bans proliferated from Washington to Canberra. Yet the global outcome has been starkly bifurcated. DeepSeek's downloads increased 960% during the very period of peak regulatory pressure, with the platform now commanding dominant market shares across China (89%), countries hit by Western sanctions, Belarus, Cuba, Russia, etc., and meaningful footholds throughout Africa and the Global South.

But beyond these headline findings, the DeepSeek episode raises fundamental questions about how we conceptualize and regulate cross-border data flows in the age of AI — questions that deserve careful analysis.

The 'transfer' framing: Legally precise or conceptually confused?

Several European data protection authorities framed their concerns about DeepSeek in terms of personal data being "transferred" to China without adequate safeguards under EU General Data Protection Regulation Chapter V. The Berlin Commissioner for Data Protection and Freedom of Information's June 2025 press release, for instance, stated that DeepSeek transfers personal data to "Chinese data processors" and stores it on servers in China, emphasizing the absence of an adequacy decision and the risk of access by Chinese authorities.

The concern is legitimate. But is the legal framing correct?