I mean, it does seem like a thing that you would have your employees use your apps on their work devices, and then experience what is wrong with it and try to make it better referencing things that you find out in their free time/ research. No government agency with any security concerns is going to allow it on their work devices. I mean hell, candy crush is blocked on government contract used devices for companies like Lockheed, L3Harris, and other defense companies.
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Seems perfectly reasonable to me - this isn't about the model itself (which the article says is even available though Azure) but the app that sends and receives its data from the Chinese servers.
Just deepseek? My company banned all except GitHub copilot.