German startup Novo AI made a bold move two weeks ago when CEO Hemanth Mandapati switched from OpenAI’s ChatGPT to DeepSeek’s AI model. The transition, he said, took mere minutes.
“If you’ve built your application on OpenAI, switching to another model is easy… it took us minutes to migrate,”Mandapati shared at the GoWest venture capital conference in Gothenburg, Sweden.
DeepSeek’s emergence is reshaping the AI landscape, offering companies significant cost savings and pushing the industry toward more affordable, competitive AI models. More than a dozen startup executives and investors echoed this sentiment in interviews, saying that DeepSeek’s pricing is dramatically lower than its competitors.
“Their offer was five times lower than the standard AI pricing,” Mandapati added. “I’m saving a lot of money, and users see no difference in quality.”
Europe’s AI Catch-Up Moment
European tech firms have long lagged behind their U.S. rivals, partly due to limited funding opportunities. But DeepSeek’s arrival could help bridge the gap.
“This levels the playing field with Big Tech,” said Seena Rejal, Chief Commercial Officer of British AI firm NetMind.AI, another early DeepSeek adopter.
Analysts at Bernstein estimate that DeepSeek’s pricing is 20 to 40 times cheaper than OpenAI’s. While OpenAI charges $2.50 per million input tokens, DeepSeek offers the same for just $0.014.
However, regulatory concerns loom. Some European authorities are investigating whether DeepSeek has copied OpenAI’s data or censors politically sensitive topics related to China.
“DeepSeek’s long-term business outlook is unclear, but its impact is undeniable,” said Sanjot Malhi, a partner at venture capital firm Northzone.
A Wake-Up Call for European AI Investment
In 2024, venture capitalists poured nearly $100 billion into U.S. AI firms, compared to just $15.8 billion in Europe, according to PitchBook data.
Meanwhile, on January 22, U.S. President Donald Trump announced a $500 billion AI initiative called Stargate, a joint venture involving OpenAI, SoftBank, and Oracle.
In Europe, only France’s Mistral has emerged as a serious AI contender, competing against giants like OpenAI, Meta, Anthropic, and Google.
DeepSeek grabbed attention after revealing in a recent research paper that training its DeepSeek-V3 model required less than $6 million in computing power from Nvidia H800 chips. Since then, it has overtaken ChatGPT as the top-rated productivity app on Apple’s App Store.
“This proves bigger isn’t always better,” said Fabrizio Del Maffeo, CEO of Axelera AI. “Lowering AI costs makes it more accessible, which can drive innovation across the industry.”
Even if some analysts doubt DeepSeek’s cost claims, they acknowledge that its expenses are significantly lower than those of U.S. firms.
“DeepSeek is a huge opportunity for companies like ours,” said Ulrik R-T, CEO of Denmark’s Empatik AI. “It shows that you don’t need a billion-dollar budget to build impactful AI.”
The AI Price War: Cost vs. Security
The AI pricing battle is already heating up. Last week, Microsoft announced that OpenAI’s new o1 reasoning model would be available for free to all Copilot users, instead of the usual $20 per month subscription fee.
“AI costs are falling, and future adoption will likely favor transparent, open-source solutions—even if they come from China,” said Joachim Schelde of Scale Capital.
However, larger companies remain cautious. Tech giants like Nokia and SAP are hesitant to switch, citing concerns beyond cost.
“Price is just one factor,” said Alexandru Voica, Head of Corporate at Britain’s Synthesia, a firm valued at $2.1 billion. “Security, certifications, software integrations—these are just as important as affordability.”
With DeepSeek shaking up the market, Europe’s AI industry faces a pivotal moment—one that could either fuel its technological resurgence or deepen its reliance on foreign AI leaders.
