It seems that the artificial intelligence industry is experiencing its “iPhone moment” — a transformational shift that forces us to rethink everything we knew about this field. Just as Apple’s innovation in 2007 revolutionized perceptions of mobile technology, the emergence of the Chinese neural network DeepSeek is also changing our understanding of AI development. After all, this project has achieved success by investing incomparably less money into its developments compared to the tens of billions of dollars spent on research by industry giants.
Vladimir Kokorin, Spanish venture IT investor, founder of the British BCCM Group and columnist wrote about how the rules of the game in the AI sphere are now changing.
As you may recall, almost immediately after DeepSeek’s breakthrough, the largest technology companies lost about a trillion dollars in market capitalization. Then, the Hang Seng Tech index rose by 25% from its January 2025 low, significantly outpacing the Nasdaq 100’s modest 4.4% growth. This became recognition of a new reality in AI development. Now, the key question is not who will create the most expensive and large-scale AI models, but who will develop the most efficient ones.
DeepSeek has demonstrated that more effective algorithms and innovative approaches to training systems can compensate for limited resources. This discovery is particularly important for emerging markets and small companies, which were previously considered incapable of competing with technology giants in AI development.
This shift has triggered a strategic turn among industry leaders. The largest technology companies are quickly adapting their strategies. Microsoft and Google are following suit, signaling the end of the era of monolithic AI systems. The focus is shifting from raw computing power to integration and efficiency.
This is evidenced by the collective commitment of tech giants to invest around $300 billion this year in AI-related capital expenditures, with a noticeable emphasis on practical applications and interaction rather than just model size.
The transformation goes beyond just technological approaches. Companies are radically rethinking their organizational structures and business models. They are increasingly focusing on creating practical solutions tailored to specific industries and improving the efficiency of existing systems. This new approach opens opportunities for a broader range of players who can make meaningful contributions to innovation in this field.
Escalation of global competition
It is clear that the world has entered a new era of technological rivalry, where the battle for supremacy in artificial intelligence is playing out like a complex geopolitical chess match. Donald Trump’s administration has taken a firm stance, asserting that the most powerful artificial intelligence systems must be created in the U.S. and on American chips. However, this approach faces serious competition from other regions.
France has responded with an investment program of 109 billion euros in AI infrastructure, while the UAE has allocated 50 billion euros for the construction of a new data center campus. These large-scale investments reflect the global race to establish technological sovereignty, with each region bringing its own advantages to the competition.
Chinese companies continue to demonstrate remarkable resilience despite export restrictions on advanced semiconductors. The breakthrough of the Chinese neural network has sparked renewed interest in Chinese technology companies.
Regulatory competition
However, the most exciting developments are unfolding in the regulatory sphere. The refusal of the U.S. and the UK to sign a joint communiqué at the Paris summit on “transparent, ethical, and safe AI” reflects deep differences in approaches to controlling the technology.
The European approach, embodied in the ambitious AI Act, can be described as “preemptive cautious intervention.” Brussels, true to its tradition of protecting citizens’ rights, is creating a complex regulatory framework even before the technology has fully matured.
The U.S., on the other hand, has a deep belief in the market’s ability to self-regulate. Washington prefers to let technology develop organically, intervening only in cases of blatant violations.
The Chinese approach represents a kind of “technological mercantilism.” Beijing skillfully balances between strict state control and targeted support for national leaders. The successes of Chinese neural networks, achieved despite sanctions, show that this model is no less effective than Western alternatives.
The emerging fragmentation of the regulatory landscape creates additional challenges for global technology companies, which are forced to adapt their products and strategies to different jurisdictions.
Looking to the future
The end of absolute dominance in AI does not mean the decline of American technological leadership. On the contrary, the industry is entering a more mature and interesting phase of development. The diversity of approaches and business models not only stimulates innovation but also makes the technology more accessible.
At the same time, American companies possess one very important asset that often remains overlooked: historically established partnerships with corporate clients. Building a global support infrastructure requires decades of work and experience, creating a natural barrier for new market entrants.
As companies adapt to the new reality, we will likely see accelerated development in areas that would have taken a decade in the previous paradigm. The real winners in this transformation will be end users, who will benefit from increased competition, diverse approaches to AI development, and more affordable technologies.
In the coming years, the market is likely to remain volatile as it adjusts to the new reality. However, the fundamental shift toward more efficient, accessible, and integrated AI solutions appears irreversible. Companies’ success in this new era will depend not only on their technological capabilities but also on their ability to adapt and thrive in this more competitive and dynamic environment.
Vladimir Kokorin is a Spanish entrepreneur of Russian heritage, an IT venture investor. In addition, Vladimir Kokorin is the founder of the British consulting company BCCM Group and the co-founder of the digital business travel platform Tumodo.
The photo in the article is provided by the company(s) mentioned in the article and used with permission.
