Microsoft eyes DeepSeek for enterprise AI

Microsoft is moving Copilot Cowork to usage-based pricing as it expands access to the enterprise AI tool — and is considering a Microsoft-hosted version of DeepSeek as a cheaper model option.

Why it matters: Microsoft's move to add a model from a Chinese AI company could draw criticism.

The big picture: Agentic tools like Copilot Cowork, Anthropic's Claude Code and OpenAI's Codex can keep calling AI models as they work through tasks — boosting productivity but also creating bonkers AI bills.

Driving the news: Microsoft says companies using Copilot Cowork will pay based on how much compute they use.

• The company tells Axios it is exploring a fine-tuned version of DeepSeek V4, or another open-source model, as a lower-cost alternative to the Anthropic and OpenAI models now powering Copilot Cowork.
• Microsoft says it expects to make a lower-cost model available in the coming weeks and will confirm its choice then.

Zoom out: The testing reflects Microsoft's broader push toward a multi-model approach, rather than relying only on models from OpenAI and Anthropic.

Between the lines: If Microsoft goes forward with DeepSeek, the company says, the model would be optional for customers and fully hosted on Azure, keeping customer data within Microsoft's cloud and covered by Azure's enterprise security, compliance and data-residency controls.

• Microsoft says it has also fine-tuned the model and added safeguards, including changes aimed at reducing bias.

What they're saying: Charles Lamanna, Microsoft's executive vice president for Copilot, agents and platform, told Axios that testing showed Copilot Cowork could not be offered on an unlimited-use basis.

• "We have users who do hundreds of tasks a week, which is great — they're way productive — but the consequence is the costs can go very high," Lamanna said.