South Korea said on Thursday that DeepSeek, a Chinese AI startup, secretly shipped out user data and prompt content without asking anyone.
The country’s Personal Information Protection Commission said the privacy breach happened while the app was still downloadable in local app stores.
The agency said the company behind the app, Hangzhou DeepSeek Artificial Intelligence Co Ltd, failed to follow the rules and pushed personal data to companies in China and the United States during its South Korean rollout in January.
The commission confirmed that DeepSeek didn’t get permission from users before offloading their data. It said the company didn’t follow any basic consent requirements when the app went live in South Korea. This wasn’t just limited to names or emails. The data included whatever users typed into the AI system, plus info about their device, network, and app usage.
The problem got worse in February when South Korea’s data agency froze all new downloads of the app. Officials said the ban came after DeepSeek admitted it hadn’t followed certain data protection laws. At that point, the agency started digging deeper into what exactly was being sent out and who was getting it.
By April 24, the investigation found that DeepSeek had sent sensitive prompt content directly to Beijing Volcano Engine Technology Co. Ltd. The agency also said the transfer included technical data about the users’ devices and how they were using the app.
The company didn’t deny the action. It told the commission that the data sharing with Volcano Engine was meant to improve how the app worked. But officials weren’t buying it.
DeepSeek misled South Korea with fake claims
The commission said DeepSeek claimed to have stopped sending prompt data on April 10, but the privacy damage was already done. The agency didn’t wait. It issued a formal corrective recommendation telling the company to erase all prompt content already sent to Volcano Engine and to set up a legal reason for sending any future personal data outside South Korea.
This warning came while the country was also dealing with serious economic pressure. Speaking on Wednesday, Rhee Chang Yong, the Bank of Korea Governor, said that U.S. President Donald Trump’s tariffs were hurting South Korea’s economy. “I really hope this trade tension will dissipate, because it’s bad for everybody,” Rhee told CNBC during the IMF-World Bank Spring Meetings.
Rhee said the tariffs had become a major problem for the country’s growth. He explained that the damage isn’t just direct. The U.S. tariffs on other countries are also screwing with South Korea’s supply chains.
“We will be affected directly by the U.S. tariffs [and] also indirectly by their tariffs to other countries, for example, the semiconductor production in Vietnam, car and electronics production in Mexico, and our battery production in Canada,” said Rhea.
Just one day later, South Korea’s economic data confirmed the hit. Early numbers showed the GDP dropped 0.1% in the first quarter of this year. That’s the first time the economy has shrunk since the fourth quarter of 2020.
A team of South Korean trade officials is now heading to Washington. Acting President Han Duck-soo said he hopes the negotiations will lead to an agreement that works for both countries. But as of Thursday, the Ministry of Trade, Industry and Energy still hadn’t finalized the agenda.
Rhee said the slowdown wasn’t just from global trade issues. He blamed some of it on the country’s political mess. The first quarter saw multiple disruptions tied to the impeachment trials of top government officials. The Constitutional Court dismissed the impeachment of Prime Minister Han Duck-soo in March, putting him back in power temporarily.
But on April 4, the court entirely stripped Yoon Suk Yeol of the presidency. That left Han back in charge—this time as acting president. The country is now preparing for a new presidential election on June 3, and Rhee said he expects the political noise to settle once that’s over.
Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
