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DeepSeek Levels AI Race for Europe, Challenging Big Tech

DeepSeek empowers European tech firms to compete in the global AI race with cost-effective solutions, disrupting U.S. dominance and driving innovation across the industry.

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DeepSeek’s Early Adoption by European Tech Firms

Hemanth Mandapati, CEO of German startup Novo AI, was an early DeepSeek chatbot adopter, switching from OpenAI’s ChatGPT to the Chinese AI model two weeks ago.

According to him, “If you have built your application using OpenAI, you can easily migrate to the other ones… it took us minutes to switch,” he stated during an interview conducted outside of the GoWest venture investor conference in Gothenburg, Sweden.

Impact on the AI Landscape

According to over a dozen startup leaders and investors, DeepSeek’s rise is transforming the AI landscape by providing businesses with access to the technology at a fraction of the cost. Additionally, it might encourage other AI firms to enhance their models and lower costs.

“There was an offer from DeepSeek which was five times lower than their actual prices,” stated Mandapati. “I am saving a lot of money and users don’t see any kind of a difference.”

Europe’s AI Investment Gap

Due to their better access to capital, U.S. competitors have taken on the new technologies at a faster pace than European tech companies. Executives, however, believe DeepSeek has the potential to revolutionize the industry.

Seena Rejal, the chief commercial officer of the British company NetMind, stated, “It represents a major step forward in democratizing AI and leveling the playing field with Big Tech.” Another early DeepSeek adopter is AI.

Competitive Pricing Strategy

According to Bernstein analysts, DeepSeek’s pricing is 20–40 times less expensive than that of comparable OpenAI models.

At the moment, DeepSeek charges USD 0.014 for one million input tokens, or units of data processed by the AI model, whereas OpenAI charges $2.5 for the same quantity.

Concerns Over DeepSeek’s Transparency

Authorities are worried about whether DeepSeek is filtering responses that might negatively represent China or duplicating OpenAI data. Several European nations are presently looking into it.

According to Sanjot Malhi, a partner at venture financing company Northzone, “the structural impact seems quite pervasive, even though the future of DeepSeek as a business is difficult to predict.”

Wake-up Call for Europe’s AI Ecosystem

According to PitchBook data, venture capitalists in the U.S. invested about $100 billion in AI businesses in 2024, while in Europe, they invested roughly $15.8 billion.

U.S. President Donald Trump just announced on January 22nd the $500 billion AI initiative known as Stargate, which is a cooperative venture supported by Oracle, SoftBank, and OpenAI.
Europe has seen more moderate investment.

Rapid Rise to Popularity

The ranking of the best fundamental models, which is led by companies like Google, OpenAI, Meta, and Anthropic, only includes France’s Mistral.

After revealing in a study last month that training DeepSeek-V3 took less than $6 million in processing power from Nvidia H800 chips, China’s DeepSeek gained notice. Since then, it has surpassed ChatGPT to win the top spot among productivity apps in the Apple App Store.

Industry Analysts on DeepSeek’s Potential

“This is a wake-up call that bigger isn’t always better,” Axelera AI CEO Fabrizio Del Maffeo stated. “By making models more attainable to everyone, the total cost of ownership and barriers to building innovative tech is lowered, which can be a catalyst for the whole industry.”

Analysts agree that DeepSeek’s training cost is lower than similar American models, but others question whether it is as low as the business claims.

Appeal for European Startups

As stated by Ulrik R-T, CEO of Denmark’s Empatik AI, “I see DeepSeek as a tremendous opportunity for companies like ours.” “It showed that we do not need huge budgets to be able to achieve our vision.”

Cost vs Safety in the AI Price War

The price war has already begun.

Last week, Microsoft made OpenAI’s o1 reasoning model available to all Copilot customers for free, rather than charging USD 20 a month as is customary.

Even though it’s in China, Joachim Schelde of Scale Capital stated that “AI prices are going down, so future usage is probably going where there is transparency, which is usually open source.”

Larger Businesses Hesitant to Adopt DeepSeek

Larger businesses are more hesitant to convert, from Germany’s SAP to Finland’s Nokia.
“Cost is just one factor,” said Alexandru Voica, the Head of Corporate at the Synthesia in Britain, which was recently valued at USD 2.1 billion. “Other factors are: ‘do you have all the security certifications, the frameworks, the software ecosystem that allows companies to build and integrate with your platform?'”

ALSO READ: How DeepSeek is Disrupting the AI Industry with Affordable, Scalable, and Open-Source Innovation

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