Microsoft Mulls China’s DeepSeek for Copilot, Probably to Trump’s Chagrin

Microsoft, now free of the shackles that previously tied it to OpenAI, apparently has eyes for other AI models—particularly ones that are cheap. According to a report from Axios, tokenmaxxing is taking its toll on Microsoft’s AI tool Copilot, and it is looking at the possibility of using its own version of the Chinese open-source model DeepSeek to keep its costs down.

Assuming Microsoft were to take this path, the company would reportedly use a modified and self-hosted version of DeepSeek-V4, the latest version of the popular model from China. It would be used as a lower-cost option to power the company’s Copilot Cowork, the agentic AI offered through the Microsoft 365 enterprise suite.

It’s certainly not hard to understand why Microsoft would want to cut some costs. The company’s Copilot Cowork currently runs on Anthropic’s models and has versions that are compatible with OpenAI’s options. But both of those keep raising their prices and have moved away from “all-you-can-eat” pricing that was starting to cost them. That has pushed Microsoft to move to a usage-based pricing model for its agentic AI solution, per Axios. If it can keep the costs down with a cheaper model, it’ll keep its customers happy.

Probably will piss off the Trump administration, though! Trump and company have been offering increased scrutiny to AI models, and have a particular hard-on for foreign options. The administration has threatened to come after Chinese AI companies over accusations of theft of models trained by American-based companies, mulled banning models including DeepSeek, and just suspended the use of Anthropic’s latest model for foreign nationals after security concerns were raised. So, hard to imagine they’ll take it well if Microsoft does adopt DeepSeek, no matter what precautions it puts in place.

This entire decision to take on DeepSeek or (another cheap AI model) comes after Satya Nadella published a long essay on X titled, “A frontier without an ecosystem is not stable,” in which he argued that allowing just a few major players in the AI space to dominate would ultimately be harmful for the economy and society. It’s clear Microsoft is trying to move away from being locked into the big players, after having a very tight and tense relationship with OpenAI, and it seems like it’s trying to encourage others to do the same. It might prove hard to get them to follow suit if they will have to worry themselves with government scrutiny if they adopt anything not directly under the control of a US firm.