DeepSeek and Rednote signal the dawning era of APAC

The AI race is a tense one. Billions of dollars have been poured into the likes of OpenAI. Meanwhile, the  US and UK governments, among others, have pledged to invest heavily in AI development, suggesting that they feel it is of critical importance to “win” the new space race. 

So there was much shock when, more than a year after ChatGPT sounded the starting shot, Chinese startup DeepSeek delivered a fully functional generative AI (gen AI) model out of seemingly nowhere. By most accounts, DeepSeek  works more smoothly than its competitors. More importantly, it does so at a fraction of the cost, which caused chipmaker Nvidia’s stock price to drop 17% on the day of the announcement (per IG).

The competition has just shot up, and the price points have just plummeted. If gen AI truly is the future of industry, the Chinese market looks like it just got the upper hand. 

DeepSeek is not the first Chinese app to top US store rankings in the last few weeks, either. With TikTok under threat, American users flocked to social app Rednote (小红书) and their interactions with its majority Chinese userbase made headlines. Not to mention that TikTok itself (still not banned in the US) has its roots in China as well, through parent company ByteDance. 

A fragmenting cultural zeitgeist

American apps, American companies, American consumers and American culture have dominated the global market for decades. Yet in recent years, we have seen shifts. Local-language TV shows on platforms like Netflix have disrupted the primacy of Hollywood. Music scenes have localised, with majors like Universal and Warner investing in independent labels in emerging markets to keep abreast of the shift. While the US remains the highest ARPU market for social platforms, Asia Pacific (APAC) is rapidly becoming the largest in revenues. China is not alone; India is home to a strong technology and startup scene, with powerful cultural capital popular worldwide through its diaspora population. 

Underpinning these market-level and cultural shifts is a geopolitical turning point. With intensifying climate events and new national leaders intent on disruption, the balance of power is shifting. This race to “win” at AI is not just about the technology itself; whoever wins the next technology war will have the upper hand in terms of geopolitical power too. 

Winning in the age of (dis)information 

That China and the US are competing over AI and social platforms specifically is not a coincidence, although they might seem frivolous on the surface. Social media is now a critical infrastructure, and is a de-facto means of communication (The Economist recently covered how Somalia’s national logistics run on WhatsApp). Gen AI will (in theory) create much of what users communicate on it, from contract summaries to history lessons to podcast scripts to memes. One supplies the information; the other enables people to share it. In our current age of the internet, no two things are more important. 

The competition is fascinating to watch (and complicated to predict), because it is not only free-market principles and consumer choices at play, but also institutionalised ideologies, and an underpinning contest for geopolitical power. The battlegrounds chosen are our apps for cat videos and ‘how to’s’, but the implications of who comes out on top will be dramatic. In the meantime, however, these governments will likely close off before they give up – meaning we will see increased protectionism and stricter ‘geofencing’ of social platforms. Meanwhile, consumers themselves will attempt to break through, as they already have with VPNs and downloads of Rednote. 

The last two decades of globalised culture and free sharing of digital content are about to be replaced by fragmenting social platforms and changing algorithms, resulting in a tribalising internet defined by regions and scenes. 

We are mapping out this future in our Social coverage area. Get in touch info@midiaresearch.com to learn more about how you can access it in full.