Microsoft is weighing a self-hosted, fine-tuned version of Deepseek V4 as a cheaper model option for Copilot Cowork, Axios reports. The company is also shifting Cowork to usage-based pricing. Cowork adapts Anthropic's Claude technology, which leans heavily on agentic reasoning and burns through tokens fast.

Copilot EVP Charles Lamanna told Axios that flat-rate pricing isn't sustainable because of "users who do hundreds of tasks a week," driving costs up quickly. Microsoft already made a similar move with GitHub Copilot, switching it to usage-based billing.

A Chinese AI model could draw criticism, especially in the US. Microsoft stresses that Deepseek would be optional and fully hosted on Azure, keeping customer data in Microsoft's cloud. The model has been customized with safeguards against bias. A final decision is expected in the coming weeks.

The move fits a blog post CEO Satya Nadella published this week, arguing for an ecosystem of AI models companies can pick and tune for specific use cases and costs. Nadella previously called AI a consumption business, saying he wants "intense users and intense usage."