In a move that signals a shift in its artificial intelligence strategy, Microsoft has made Chinese startup DeepSeek’s R1 AI model available on its Azure cloud platform and GitHub, the company announced on Wednesday.
The integration of DeepSeek R1 into Microsoft’s ecosystem marks an expansion of the tech giant’s AI offerings as it continues to diversify beyond OpenAI’s ChatGPT, a model it has heavily invested in but now seeks to reduce dependence on.
DeepSeek’s rise has been unprecedented. Just last week, the company launched a free AI assistant that it claims operates with less data and at a fraction of the cost of existing services. By Monday, the assistant had surpassed OpenAI’s ChatGPT in downloads on Apple’s App Store, triggering anxiety among investors and spurring a competitive response from AI rivals.
Register for Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register to become a better CEO or Director with Tekedia CEO & Director Program.
“This rapid accessibility—once unimaginable just months ago—is central to our vision for Azure AI Foundry: bringing the best AI models together in one place to accelerate innovation and unlock new possibilities for enterprises worldwide,” Microsoft said.
OpenAI CEO Sam Altman reacted swiftly, announcing that the company would “pull up some releases,” which materialized on Tuesday with the launch of a specialized ChatGPT model tailored for U.S. government agencies. Meanwhile, China’s Alibaba Group unveiled an upgraded version of its Qwen 2.5 AI model on Wednesday, despite the unusual timing—coinciding with the first day of the Lunar New Year.
DeepSeek R1 will now be available in Microsoft’s Azure model catalog, which already features over 1,800 AI models, catering to a broad range of developers and enterprises. Additionally, Microsoft confirmed that users will soon be able to run the R1 model locally on their Copilot+ PCs, a move that addresses growing concerns over data privacy and AI dependence on cloud services.
“We are committed to enabling customers to build production-ready AI applications quickly while maintaining the highest levels of safety and security. DeepSeek R1 has undergone rigorous red teaming and safety evaluations, including automated assessments of model behavior and extensive security reviews to mitigate potential risks,” the company said.
The move is part of Microsoft’s broader effort to diversify its AI offerings and reduce its reliance on OpenAI, the creator of ChatGPT, which has been deeply integrated into Microsoft’s AI-powered Copilot for Microsoft 365. Last month, Reuters reported that Microsoft has been working on adding both internal and third-party AI models to its ecosystem, ensuring a more diverse and competitive AI landscape within its products.
However, DeepSeek’s integration is not without controversy. The Chinese AI startup has acknowledged that it stores user information in servers located in China, a factor that could prove to be a major hurdle for its adoption in the United States, given increasing scrutiny over data security and Chinese tech influence in Western markets.
Even as Microsoft expands its AI model catalog, concerns over potential intellectual property violations are mounting. On Tuesday, Bloomberg News reported that Microsoft and OpenAI are investigating whether data output from OpenAI’s technology was obtained in an unauthorized manner by a group linked to DeepSeek. If confirmed, such a breach could raise serious questions about AI ethics, data security, and competitive practices in the industry.
The rapid success of DeepSeek has undoubtedly shaken the AI industry, with major players scrambling to defend their market positions. OpenAI’s swift response with a government-focused ChatGPT model underscores the pressure it faces from emerging competitors, particularly in light of DeepSeek’s rapid rise in user adoption.
Meanwhile, Alibaba’s decision to unveil a new version of its Qwen 2.5 AI model—despite it being the first day of the Lunar New Year—suggests that Chinese tech firms are also feeling the urgency to solidify their standing in the AI race.
What This Means for the AI Market
Microsoft’s decision to integrate DeepSeek’s AI model is seen as an indication of a widening AI battlefield, where multiple players—ranging from OpenAI and DeepSeek to Google’s Gemini and Alibaba’s Qwen—are aggressively competing for market share.
Analysts note that this move is for Microsoft, a hedging strategy that ensures its AI offerings are not entirely dependent on OpenAI while also providing alternatives to customers who may be wary of OpenAI’s dominance.
However, DeepSeek’s Chinese origins and data storage policies are expected to attract regulatory scrutiny, particularly in the United States and Europe, where lawmakers have expressed concerns over data security risks tied to Chinese tech firms.