TLDR
- Microsoft is exploring using DeepSeek V4 to power a cheaper version of its Copilot Cowork tool
- Copilot Cowork currently runs on models from OpenAI and Anthropic
- Heavy user activity is driving up AI model costs, prompting the potential switch
- Microsoft expects to release the lower-cost Copilot version within the next several weeks
- The move comes as Microsoft shifts AI tools toward usage-based pricing
Microsoft (MSFT) is reportedly considering swapping in DeepSeek AI models to power a lower-cost version of its Copilot Cowork tool, according to Axios.
The report says Microsoft has explored using a version of DeepSeek V4 for the product. Copilot Cowork currently runs on models from OpenAI and Anthropic.
Microsoft has not confirmed which model will be used. The company says it expects to announce the lower-cost version of Copilot Cowork within the next several weeks.
The potential change comes down to cost. Charles Lamanna, Microsoft’s executive vice president for Copilot, agents and platform, told Axios that some users are running hundreds of tasks per week through Copilot.
“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.
That kind of usage is good for productivity, but it puts pressure on the cost of running the underlying AI models at scale.
Why DeepSeek Makes Sense Here
DeepSeek gained attention earlier this year for delivering strong AI performance at a lower cost than many Western alternatives. For a company trying to manage margins on a widely used product, that efficiency is appealing.
Using a cheaper model for a budget-tier version of Copilot would let Microsoft keep the product accessible without eating into the economics of running it.
Copilot Cowork is one of Microsoft’s core AI productivity tools, and keeping it cost-effective matters as enterprise adoption grows.
Usage-Based Pricing Adds Pressure
The timing of this report is worth noting. Microsoft is currently shifting several AI tools to usage-based pricing. That model gives customers more flexibility, but it also means Microsoft needs to watch the cost side closely.
If customers are paying per task, Microsoft’s margins depend on how cheaply it can process each one.
MSFT stock was trading around $470 at the time of the report. The stock has had a strong run in 2026, supported largely by continued AI demand across its product lineup.
Microsoft has also not confirmed whether the lower-cost tier would replace the existing Copilot Cowork product or run alongside it as a separate option.
The company’s current Copilot lineup is split across several pricing tiers, so a lower-cost AI-powered version would fit within that existing structure.
What remains to be confirmed is whether DeepSeek V4 will be the model that powers it, or if Microsoft ends up going with another option entirely.
Microsoft says that decision will be made clear within the next several weeks.
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