Fresh on the heels of a controversy in which ChatGPT-maker OpenAI accused the Chinese company behind DeepSeek R1 of using its AI model outputs against its terms of service, OpenAI’s largest investor, Microsoft, announced on Wednesday that it will now host DeepSeek R1 on its Azure cloud service.
DeepSeek R1 has been the talk of the AI world for the past week because it is a freely available simulated reasoning model that reportedly matches OpenAI’s o1 in performance—while allegedly being trained for a fraction of the cost.
Azure allows software developers to rent computing muscle from machines hosted in Microsoft-owned data centers, as well as rent access to software that runs on them.
“R1 offers a powerful, cost-efficient model that allows more users to harness state-of-the-art AI capabilities with minimal infrastructure investment,” wrote Microsoft Corporate Vice President Asha Sharma in a news release.
DeepSeek R1 runs at a fraction of the cost of o1, at least through each company’s own services. Comparative prices for R1 and o1 were not immediately available on Azure, but DeepSeek lists R1’s API cost as $2.19 per million output tokens, while OpenAI’s o1 costs $60 per million output tokens. That’s a massive discount for a model that performs similarly to o1-pro in various tasks.
Promoting a controversial AI model
On its face, the decision to host R1 on Microsoft servers is not unusual: The company offers access to over 1,800 models on its Azure AI Foundry service with the hopes of allowing software developers to experiment with various AI models and integrate them into their products. In some ways, whatever model they choose, Microsoft still wins because it’s being hosted on the company’s cloud service.