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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: I'm Sarah Holder, host of The Big Take, and I'm

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Speaker 2: Jennifer Zabasaja, host of Bloomberg's Next Africa podcast. Today, we're

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Speaker 2: bringing you a story reported by our colleagues and newsrooms

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Speaker 2: throughout Africa and Asia.

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Speaker 3: It's about how the AI arms race is playing out

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Speaker 3: in Africa as Chinese AI developers try to break into

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Speaker 3: the burgeoning Africa tech scene. Earlier this year, a group

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Speaker 3: of tech executives from all over Africa got together at

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Speaker 3: the headquarters of a Nairobi based startup to consider a

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Speaker 3: business proposition.

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Speaker 1: So it was an early breakfast meeting and it had

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Speaker 1: a whole lot of African startup founders. And then there

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Speaker 1: was also a group from Huawei with one of the

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Speaker 1: top exigs that sort of runs sub foreign Africa's cloud services.

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Speaker 3: Loney princelu is a senior Africa reporter for Bloomberg based

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Speaker 3: in Johannesburg, and she says that Huawei Cloud Exac was

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Speaker 3: there to talk about one buzzy new company. In particular, he.

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Speaker 1: Came in with quite a strong pitch for deep Sick, saying,

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Speaker 1: you know, deeptic is so hot. That was literally his words,

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Speaker 1: deeptic is so hot. Now I want to talk about

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Speaker 1: anything else.

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Speaker 2: Deep Sik the Chinese AI platform that launched a breakthrough

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Speaker 2: reasoning model in January twenty twenty five, shocking its competition.

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Speaker 1: Deep Seek. Where did this one come from?

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Speaker 4: The cheaper ALI model from Chinese starts up deep Seek

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Speaker 4: could fraten us big tech. Deep Siki is a Chinese

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Speaker 4: startup that's producing these large language models that offer very

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Speaker 4: high performance at a relatively low cost.

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Speaker 2: That's Helen Yambura, Bloomberg's East Africa bureau chief.

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Speaker 4: Deep Siki is using Wawei hardware in the ecosystem, both

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Speaker 4: cheaps and cloud, so from a political perspective, Huawei is

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Speaker 4: promoting domestic AI tools that are running on domestic hardware.

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Speaker 2: Huawei and deep Seek's parent company, high Flyer have been

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Speaker 2: collaborating since mid twenty twenty three. In addition to hosting

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Speaker 2: deep Seek on its cloud, Huawei has also started selling

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Speaker 2: its storage and computing services in a bundle with access

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Speaker 2: to deep Seek's large language model. So Huawei's exec wasn't

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Speaker 2: just hyping up how hot deep seek is. He was

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Speaker 2: trying to pitch these African startups on using deep Seek's

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Speaker 2: AI platform and accessing it through Huawei's cloud servers, and

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Speaker 2: he presented a pretty compelling offer.

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Speaker 1: Basically, if you are going onto Huawei Cloud instead of

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Speaker 1: going directly onto deep Seek every day, you get two

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Speaker 1: million tokens free. So that's sort of unheard up and

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Speaker 1: then a crack pleaser.

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Speaker 2: Tokens are the unit that deep Seek uses to bill

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Speaker 2: for its services. Two million free tokens can get you

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Speaker 2: a lot of deep Seak computing power. According to the

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Speaker 2: Huawei presentation, they would cover about three thousand pages of

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Speaker 2: new content generated by deep Seek's model.

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Speaker 3: Huawei is offering incentives like this to African tech companies

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Speaker 3: because they stand to gain a lot too. They're trying

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Speaker 3: to establish a crucial foothold on the continent early in

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Speaker 3: the AI race, and.

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Speaker 2: Some critics worry that deep Seek and Huawei's bet on

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Speaker 2: African AI infrastructure could have complex long term consequences, including

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Speaker 2: for data privacy. This is the Big Take from Bloomberg News.

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Speaker 2: I'm Sarah Holder.

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Speaker 3: And this is a special co production of The Big

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Speaker 3: Take and Bloomberg's Next Africa Podcast. I'm Jennifer's Abasaga.

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Speaker 2: Today on the show, Deep Seek and Huawei's push to

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Speaker 2: dominate the artificial intelligence market in Africa.

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Speaker 3: What it could mean for the global AI race, the

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Speaker 3: soft power balanced between the US and China, and as

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Speaker 3: efforts to influence Africa's development, industry and innovation. Africa's digital

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Speaker 3: economy is valued at about one hundred and eighty billion

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Speaker 3: dollars today, but by twenty fifty it's expected to swell

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Speaker 3: to seven hundred and twelve billion dollars.

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Speaker 2: For the past few years, while American AI companies have

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Speaker 2: experienced record levels of growth, African companies and African users

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Speaker 2: have been largely left behind. One reason for this is

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Speaker 2: that access to computing resources plays a big role in

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Speaker 2: African startups being able to develop their own AI models

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Speaker 2: and attract funding. The bulk of the eight hundred million

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Speaker 2: dollars African AI startups attracted last year went to places

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Speaker 2: on the continent that have more AI capabilities, like South Africa, Kenya,

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Speaker 2: Tunisia and Egypt.

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Speaker 3: And Huawei's pitch for deep Seek in that Nairobi conference

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Speaker 3: room catered to the broad spectrum of AI use cases

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Speaker 3: that African entities could need, from free options for smaller

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Speaker 3: startups to private cloud systems for governments to more compute

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Speaker 3: intensive options for app developers.

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Speaker 2: Bloomberg's Lonely Prince Lou says that in Africa, deepseek is

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Speaker 2: trying to position itself as a more flexible option than

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Speaker 2: its Western competitors.

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Speaker 1: When it comes to Google, Gemini and Rita Lama, those

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Speaker 1: waste and models, you have quite a lot of restrictions,

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Speaker 1: licensing restrictions and take restrictions.

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Speaker 3: AI offerings from US companies tend to be harder to customize.

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Speaker 3: They're largely not open source, but deep seek is that

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Speaker 3: means users can access the underlying code and modify the

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Speaker 3: software to suit their needs for no additional charge.

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Speaker 1: Something like that just suits the African environment much better.

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Speaker 1: Always wants the large language models, sometimes you want a

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Speaker 1: small language model for the types of adaptations that you

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Speaker 1: want to do.

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Speaker 2: In terms of AI, one reason African startups might want

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Speaker 2: a more customizable model is because many USAI models weren't

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Speaker 2: trained on African dialects and they often fail to pick

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Speaker 2: up on cultural nuances. Using them on unfamiliar words and

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Speaker 2: situations can be expensive. They require more tokens to perform

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Speaker 2: those tasks. This all makes deep Seek's open source model

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Speaker 2: more appealing, and using the model is also much cheaper.

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Speaker 1: We spoke to one sort of in Nigeria called Equalize AI,

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Speaker 1: and so basically what deep seek is charging is twenty

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Speaker 1: seven usints to press a million words for a query,

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Speaker 1: and then a dollar a team for a million words.

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Speaker 1: In terms of the response that it generates.

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Speaker 2: That's a lot less than Chat GPT, which costs more

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Speaker 2: like five dollars for a million words of processing and

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Speaker 2: fifteen dollars for a million words generated.

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Speaker 1: That is two thousand and seven hundred dollars per month

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Speaker 1: if it us deep seek, vers is twelve thousand, five

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Speaker 1: hundred dollars if it uses chat GPT four for the

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Speaker 1: same toxic So it's a massive difference.

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Speaker 2: Deep Sex's platform is four and a half times cheaper

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Speaker 2: for Equalized AI to use, which raises the obvious question.

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Speaker 3: What's the financial appeal for deep sek. What are they

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Speaker 3: seeing financially when it comes to some of these rois.

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Speaker 1: Look, they're still charging, so they must be playing more

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Speaker 1: of a volumes game. And in terms of volumes, that

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Speaker 1: is what Africa can offer. We have a massive amount

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Speaker 1: of young people on the continent. They're all interested in

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Speaker 1: what technology can do for them. There's a lot of

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Speaker 1: restrictions in terms of actual traditional infrastructure. So technology is

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Speaker 1: where everyone's sort of looking towards. So it's a longer game,

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Speaker 1: I think for deep Sick more than it is for

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Speaker 1: open Ai, who is running for profits.

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Speaker 2: Basically, open Ai didn't respond to a request for comment

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Speaker 2: on the story. Meanwhile, Deep Sik's numbers game seems to

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Speaker 2: be working.

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Speaker 1: When it comes to startups. Specifically, every African stortup we

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Speaker 1: spoke to prefer Deep Sick at this point when it

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Speaker 1: comes to training their models, adapting their models. So what

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Speaker 1: we're seeing on the ground is that they are definitely

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Speaker 1: numbers in favor for deep sic currently.

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Speaker 3: And Huawei isn't just pitching startups on deep Sek, they're

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Speaker 3: also trying to get African governments to adopt their platform.

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Speaker 3: Here's Bloomberg Talent Yamburra.

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Speaker 4: We don't have credible evidence that African governments are formally

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Speaker 4: adopting deep sick tools for their public service and official news,

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Speaker 4: but Huawei is pushing what it calls its National Government

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Speaker 4: Cloud Solution in Southern Africa. So this is platforms to

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Speaker 4: support public services and cloud infrastructure and digitization of government services.

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Speaker 3: If deep seek were to expand into the government space.

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Speaker 3: It could be handling more sensitive data, and critics at

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Speaker 3: universities and legal firms have raised concerns about how that

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Speaker 3: data is being gathered and how it could be used.

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Speaker 3: A Wall Street Journal investigation found that Huawei technicians have

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Speaker 3: provided African governments with information on their political opponents. For example,

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Speaker 3: Huawei and the governments, though deny the claims, Deep.

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Speaker 2: Seak has already been blocked in several European countries over

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Speaker 2: data privacy concerns and what regulators say is a lack

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Speaker 2: of transparency about the relationship between the Chinese government and

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Speaker 2: companies like Huawei and deep Seek.

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Speaker 3: One of the central concerns is that the Chinese government

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Speaker 3: could gain access to deep seek data store on Chinese servers.

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Speaker 3: Italy's Data Protection Authority asked for information on deep Seek's

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Speaker 3: data collection, use and storage policies, which deep Seek did

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Speaker 3: not produce. German regulators asked for evidence that German user

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Speaker 3: data sent to China was protected in line with European standards,

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Speaker 3: which Deep Seek was unable to provide.

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Speaker 2: When asked by Bloomberg about data privacy concerns, Deep Seek

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Speaker 2: and Huawei both declined to comment. Huawei's efforts in Africa

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Speaker 2: are aligned with a similar playbook that the Chinese government

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Speaker 2: has used for over a decade as a means of

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Speaker 2: gaining soft power after the break what that approach could

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Speaker 2: mean for China's influence and its position in the global

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Speaker 2: AI race.

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Speaker 3: For over a decade, the Chinese government has made a

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Speaker 3: concerted effort to invest in foreign infrastructure, increasing its influence

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Speaker 3: in developing countries. It's a strategy known as the Belt

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Speaker 3: and Road initiative.

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Speaker 4: China is going to the developing world, especially in Africa,

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Speaker 4: and you know, extending soft power through building infrastructure, but

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Speaker 4: using technology rather than you know, the hard airports and

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Speaker 4: ports and roads, Andre Luise, this now is you know,

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Speaker 4: the software to be ahead of the yules.

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Speaker 2: This new AI software initiative isn't technically a Belt and

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Speaker 2: Road project, but it takes a similar approach, and it's

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Speaker 2: one the Chinese government has also used in the past

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Speaker 2: to expand the reach of Chinese phone companies like Huawei

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Speaker 2: and Zte into Africa.

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Speaker 4: The Chinese companies Juawi and Zte were not the first

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Speaker 4: on the continent, but these companies came with a cheaper,

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Speaker 4: more cost effective solution, so it's the same thing that

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Speaker 4: we're seeing with Deep Seek.

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Speaker 3: Belt and road projects in Kenya, Ethiopia, and Djibouti gave

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Speaker 3: China economic leverage over these developing countries. Chinese companies and

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Speaker 3: the Chinese government offered cheap loans in order to roll

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Speaker 3: out infrastructure and equipment across the continent to cement their position. Ultimately,

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Speaker 3: those nations had to majorly restructure their debt in order

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Speaker 3: to repay their loans.

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Speaker 2: Other nations who weren't able to pay back their loans,

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Speaker 2: like Sri Lanka, have had to turn over control of

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Speaker 2: their infrastructure to China. When it comes to Huawei and

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Speaker 2: Deep Seek, the leverage these companies could have is access

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Speaker 2: to information.

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Speaker 4: It's all about capturing the vast amount of data that

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Speaker 4: will shape AI in the future. Some critics are worried

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Speaker 4: that this will elcho that built and road where we

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Speaker 4: saw China forcing some poor countries to handle over critical

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Speaker 4: infrastructure to pay for all those projects. So we don't

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Speaker 4: know how these might pan out for African companies and

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Speaker 4: governments in future in terms of cost.

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Speaker 2: And there are other side effects that come from relying

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Speaker 2: too heavily on one country's digital infrastructure. For example, for

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Speaker 2: the past two years to prevent cheating during China's national

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Speaker 2: university entrance exams. China has restricted certain technical capabilities of

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Speaker 2: domestic tech companies.

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Speaker 1: Ali Baba, Black Dance, Taint, Saint and Deepseek, whose service

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Speaker 1: are all located in China. They disabled things like the

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Speaker 1: image recognition and the instant Q and A features on

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Speaker 1: sort of consumer facing products to prevent cheating.

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Speaker 2: But the move didn't just impact Chinese students.

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Speaker 1: We also saw then in Lagos in Nairobi who all

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Speaker 1: experienced slowdowns in terms of service interruptions and you can't

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Speaker 1: do anything about that.

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Speaker 2: And then there are the privacy concerns. Most big Western

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Speaker 2: AI models are supposed to comply with European laws governing

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Speaker 2: transparency around data collection and processing, but deep Seek's Chapot

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Speaker 2: does not. Instead, it typically stores user data on servers

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Speaker 2: in China, which under Chinese law, could be accessed by

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Speaker 2: the Chinese government. And while several European countries have taken

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Speaker 2: steps to curb deep Seek adoption, African countries have not.

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Speaker 4: I think most countries are really you know, at the

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Speaker 4: starting stage of developing the regulation and so on, so

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Speaker 4: there's a lot of adoption without the legal background, without

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Speaker 4: the regulatory backbone to cover that, so the technology has

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Speaker 4: sort of front run the regulation, which might be a problem.

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Speaker 3: Then there's the looming geopolitical backdrop to this. Bloomberg's Helen

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Speaker 3: Yamburra told me that if Africa nations and tech companies

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Speaker 3: start relying too heavily on Chinese tech, they could get

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Speaker 3: caught in the crossfires of the US China trade war.

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Speaker 2: For instance, if the US government tries to disrupt China's

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Speaker 2: AI capabilities by limiting access to chips or ratcheting up terrace,

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Speaker 2: that could also impact Africa's AI capabilities.

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Speaker 4: The sticks are just really too high for a single

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Speaker 4: country to rely on just one country, whether it's the

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Speaker 4: US or China.

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Speaker 2: The US has tried to pursue its own tech infrastructure

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Speaker 2: projects in Africa in the past.

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Speaker 1: And so big deals being announced in thin specifically, there

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Speaker 1: was a big AI data center being announced of more

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Speaker 1: than a billion dollars.

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Speaker 2: But under the Trump administration, those efforts have stalled.

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Speaker 1: And that's opened the way again for China. China, as

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Speaker 1: we said, has been here for a long time. That've

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Speaker 1: been in wasting for twenty years, so that they do

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Speaker 1: own a lot of the equipment in our five G

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Speaker 1: in our fiber, in our data centers in the US

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Speaker 1: companies that are here. A lot of them sort of

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Speaker 1: have set up shop in South Africa and some in

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Speaker 1: Kenya and some in Nigeria, but they don't really advance

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Speaker 1: to other African countries. And as we know, there's fifty

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Speaker 1: four of them. So China has really played the game

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Speaker 1: also in smaller countries.

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Speaker 3: And in part because of that dynamic, the expansion of

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Speaker 3: Chinese AI tools in Africa hasn't been met with the

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Speaker 3: same suspicion as it has in European countries or the

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Speaker 3: United States, because Loni says, many people in Africa are

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Speaker 3: just as skeptical of US tech.

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Speaker 1: In Africa, people don't always mistrust the East versus the West.

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Speaker 1: Many also distrust the West in terms of privacy and

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Speaker 1: you know, take and all of that. So African general

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Speaker 1: has a better relationship with China than a europe for instance.

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Speaker 1: But yeah, I would just I would like to just

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Speaker 1: see whether this adoption of deep seek in the sort

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Speaker 1: of space continues.

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Speaker 3: For now, Alen says she's watching to see how Africa's

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Speaker 3: AI industry develops.

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Speaker 4: What will be interesting is to see whether Africa can

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Speaker 4: come up with its own, you know, homegrown AI industry.

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Speaker 4: There's very many hurdles to this. It doesn't have the

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Speaker 4: money that you know, China or the US will throw

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Speaker 4: at AI. It also doesn't have the skilled labor to

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Speaker 4: do this or the infrastructure. But it would be good

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Speaker 4: for Africa to be at least to try for some

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Speaker 4: independence on this front.

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Speaker 2: This is the Big Take from Bloomberg News.

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Speaker 3: I'm Sarah Holder and I'm Jennifer's Abisada with Next to Africa.

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Speaker 2: Follow The Next Africa podcast now and join them every

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