Microsoft president Brad Smith warned that Chinese companies are outpacing U.S. rivals in the global race for artificial intelligence adoption, particularly in emerging markets. According to a Financial Times report, China's success stems from low-cost open-source models backed by heavy state subsidies, allowing them to undercut American competitors on price. The Chinese startup DeepSeek has become a prime example of this shift.

Its R1 large language model accelerated AI adoption across the global south due to its accessibility and affordability. Microsoft's research estimates DeepSeek holds an 18% market share in Ethiopia and 17% in Zimbabwe, with even larger shares in nations where U.S. technology faces restrictions. Smith cautioned that this growing AI divide could worsen economic inequality between wealthy and developing regions.

He urged for greater investment in data centers, power infrastructure, and skills training to prevent the West from falling further behind. The warning signals a fundamental shift in technological influence, where open-source accessibility is proving more decisive than proprietary innovation for much of the world.