When German startup Novo AI faced mounting costs with OpenAI's ChatGPT, CEO Hemanth Mandapati made a swift decision to switch to DeepSeek, a Chinese AI model that is rapidly reshaping the artificial intelligence landscape. \"If you have built your application using OpenAI, you can easily migrate to the other ones … it took us minutes to switch,\" Mandapati shared during the GoWest conference for venture capitalists in Gothenburg, Sweden.
DeepSeek's emergence offers a game-changing proposition for European tech firms: access to advanced AI technology at a fraction of the cost of competitors. \"There was an offer from DeepSeek which was five times lower than their actual prices,\" Mandapati noted. \"I am saving a lot of money, and users don't see any kind of difference.\"
For startups across Europe, DeepSeek represents an opportunity to level the playing field in a market historically dominated by U.S. tech giants with greater access to funding. \"It marks a significant step forward in democratizing AI and leveling the playing field with Big Tech,\" said Seena Rejal, chief commercial officer of British firm NetMind.AI, another early adopter of DeepSeek.
Analysts at Bernstein estimate that DeepSeek's pricing is 20 to 40 times cheaper than equivalent models from OpenAI. While OpenAI charges $2.50 for 1 million input tokens—units of data processed by the AI model—DeepSeek currently charges just $0.014 for the same number. This significant reduction in cost is enabling European startups to accelerate their AI adoption and innovation.
Despite European venture capitalists investing nearly $15.8 billion in AI companies in 2024—considerably less than the nearly $100 billion invested in U.S. AI companies—the arrival of DeepSeek is energizing the European tech scene. China's DeepSeek gained attention after revealing in a research paper last month that training its DeepSeek-V3 model required less than $6 million worth of computing power from Nvidia H800 chips. Since then, it has overtaken ChatGPT to become the top-rated productivity app on Apple's App Store.
\"This is a wake-up call that bigger isn't always better,\" said Fabrizio Del Maffeo, CEO of Axelera AI. \"By making models more attainable to everyone, the total cost of ownership and barriers to building innovative tech are lowered, which can be a catalyst for the whole industry.\"
The competitive pricing of DeepSeek may have already sparked a price war among AI providers. Last week, Microsoft made OpenAI's o1 reasoning model available to all Copilot users for free, instead of the usual $20-per-month subscription fee.
\"I see DeepSeek as a tremendous opportunity for companies like ours,\" said Ulrik R-T, CEO of Denmark's Empatik AI. \"It showed that we do not need huge budgets to achieve our vision.\"
As DeepSeek continues to make inroads into the European market, it is poised to play a significant role in accelerating AI development and adoption across the continent. The move not only challenges the dominance of established AI firms but also promises to foster innovation and growth among European tech startups.
Reference(s):
DeepSeek helps Europe's tech firms catch up in global AI race
cgtn.com
