NY’s Data Center Moratorium, Microsoft’s New Security AI Overhaul, The American AI Dividend Debate

**Akash Pasricha** (0:13)
Welcome everyone to The Informations TITV. My name is Akash Pasricha. It is Thursday, July 16th. Today on the show, we have exclusive new reporting on DeepSeek. Our Asia Bureau has gotten wind of the company's latest financials, as it potentially looks to a Shanghai IPO as early as next year. We're then covering New York's attempt to limit data centers from being built in the state and President Trump's reaction. We'll also dive into a major shakeup at Microsoft. The Tech Giant Security Division is undergoing a significant restructuring. Microsoft reporter Aaron Holmes will join us shortly to unpack his exclusive on what is happening behind closed doors.
Finally, we're going to take a look at the debate on whether AI companies should give Americans a share of their profits. We'll talk to OneWeekBC with a strong opinion on this. It's going to be a great show, so let's get right on into it.
DeepSeek could be marching towards an IPO, and The Information published exclusive new reporting this week on the company's latest revenue traction. I want to bring on Jing Yang, our Asia Bureau Chief, to walk us through what we know. Jing, welcome to the show. It's great to have you here.

**Jing Yang** (1:25)
Hi, Akash.

**Akash Pasricha** (1:26)
All right. So what do we know about DeepSeek's financials?

**Jing Yang** (1:29)
Yeah. So we reported earlier this week that the company's annual lives-to-run rates is approaching $500 million.
And that sales, that revenue, mostly came from selling cloud-based excess to their latest deflection model called V4. And I just want to give you the context. V4 was launched in about three months ago. That's a lot. In that, yeah, that is not a small amount.

**Akash Pasricha** (2:01)
What about margins? What do we know about profitability?

**Jing Yang** (2:04)
So we know that the gross profit margin from selling cloud-based excess to V4 is somewhere between 70 to 80%.
And again, I want to give you the context to that percentage. We know that, in general, Chinese open-source AI models charge for excess token costs. It's such a tiny fraction of leading models from Anthropic and OpenAI. So if you think about how low that they're already charging customers for, this high gross profit margin is actually really remarkable. And we revealed in the story that they're able to achieve this high gross margin because DeepSeek has really strong capabilities into essentially running their AI models, running the inference of their models at a higher efficiency because they apparently worked out how to run response to AI queries and have that output a lot more efficient than on a single chip basis.

**Akash Pasricha** (3:13)
Well, and Jing, I should point out, this is staggering. I mean, 70% to 80% gross margins, these are the software gross margins that we are so familiar with on this show.
And notably, it's the margins that no AI lab has been able to even get near. I mean, we're talking about even having positive gross margins on this show for some companies. So that is very much a staggering finding. Tell me, if the financials of the company are so strong, at least on a unit economic basis, why is it then looking to raise money again?

**Jing Yang** (3:49)
Well, so let me just say that there's actually a lot of, you know, people waiting to see if they can actually keep up this kind of high gross margin, number one. Number two, as you know, we're living in an era where there's a new model that drops every couple of days.
So the company, with V4 that has been super popular, they cannot just sit still, right? They need to continue to invest in compute, in data, in talents, in order to continue to improve and scale up their models. And this is why they have to raise.

**Akash Pasricha** (4:23)
Right. Now, last time we had you on the show, might not have been last time.
When we had you on the show previously, you talked about the first funding round that DeepSeek was looking to raise. And I remember our conversation, you were hitting home the point how unique the structure of that funding round was, and how important it was to DeepSeek's founding team to preserve control over the company. They obviously have a very specific ambition here to keep things open source. Is this second funding round, is it as unique, is it the same covenants around the fundraise that we talked about last time?

**Jing Yang** (5:06)
I mean, yes and no. So let me just step back a little bit. So they closed on raising about $7.4 billion equivalent, so 50 billion yuan just about a month ago. And now they are raising the same amount of money is their target, but at a higher valuation, at about like a 30-35 percent higher valuation. I'm just saying that nothing has happened in the last four weeks. But they're coming out, raising the same amount of higher valuation. And we actually reported that the company started plotting raising the second round before the first round was officially closed.