US Bans DeepSeek From Federal Agencies and Sanctions Chinese AI Venture Tied to Google Trade-Secret Case

The Trump administration ordered all federal civilian agencies to remove DeepSeek and any third-party products or services built on the Chinese AI model from their IT systems, with the Department of Homeland Security directive also blocking new purchases of DeepSeek-related technology. The ban cites the risk that DeepSeek use may result in the transfer of sensitive government data to systems operating under Chinese jurisdiction, escalating Washington's effort to exclude Chinese AI from American government infrastructure.

On the same day, the U.S. Department of State announced sanctions against Shanghai Zhisuan Technology Co., a startup founded by Ding Linwei, a former Google engineer accused of stealing trade secrets from the company. The action also blacklisted a Chinese venture firm established by Lu Qi, a former Microsoft AI scientist, over its alleged ties to Shanghai Zhisuan, marking what Bloomberg described as a sanctioning of China's answer to Y Combinator.

Beijing pushed back sharply, with China's foreign ministry saying it "always opposes overgeneralising the national security concept" and vowing to "firmly safeguard the legitimate interests of Chinese firms." Separately, UK government advisers warned that Britain risks becoming a "high-value AI customer" rather than a global AI leader unless it urgently accelerates its own AI development, underscoring how the U.S.-China rivalry is shaping AI policy well beyond Washington and Beijing.