Microsoft has thrown a major disruptive force into the AI market, announcing free, unlimited access to OpenAI’s powerful o1 model through Copilot’s new “Think Deeper” feature.
The move undercuts OpenAI’s own pricing model, which charges users $200 per month for unlimited access via ChatGPT Pro and $20 per month for limited access via ChatGPT Plus.
By offering OpenAI’s most advanced AI reasoning model at no cost, Microsoft is positioning Copilot as an attractive, free alternative to OpenAI’s subscription-based service. The announcement, made by Microsoft AI chief Mustafa Suleyman, confirms that Copilot users “everywhere” can access o1 at no cost, provided they sign in with a Microsoft account.
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This aggressive strategy underscores Microsoft’s deep integration with OpenAI, as it continues to leverage its multi-billion-dollar investment in the AI company. Unlike OpenAI’s direct-to-consumer pricing model, Microsoft is absorbing the cost and embedding AI functionality within its ecosystem, making Copilot a more appealing choice for everyday users.
The Think Deeper feature, designed to deliver more thoughtful and well-researched responses, contrasts with Copilot’s usual, more concise replies. While not a search engine, Think Deeper specializes in complex problem-solving, coding assistance, and analytical reasoning—areas where deep AI processing is critical.
This development, however, is not happening in a vacuum, it comes amid an escalating price war in the AI industry, driven by increasing competition and a recent breakthrough in AI efficiency that threatens to collapse prices across the board.
Microsoft’s move comes just days after the emergence of DeepSeek, a Chinese AI model that dramatically cut the cost of running large-scale AI models. DeepSeek’s breakthrough—a cutting-edge Mixture of Experts (MoE) approach—has allowed it to perform better than OpenAI’s GPT-4 while slashing operational costs.
DeepSeek’s innovation is shaking up the AI industry by showing that state-of-the-art AI doesn’t have to be expensive, challenging OpenAI’s high subscription fees. In response, rival AI developers, including Microsoft, are scrambling to adjust their pricing models to avoid losing market share to newer, more cost-efficient models.
Microsoft is showing that it is willing to absorb AI costs to remain competitive by offering o1 for free. This move pressures OpenAI, Google, and other AI players to either lower their own prices or risk losing users to Copilot.
Unlike OpenAI, which must monetize its AI services directly, Microsoft can afford to subsidize AI costs because it integrates AI across its massive software ecosystem—including Windows, Office, and Azure cloud services.
With the Think Deeper feature, Microsoft is providing users with an AI assistant that can generate complex reasoning, write code, and analyze intricate topics—all for free. While the company has not yet signaled plans to charge for Think Deeper, the move suggests that Microsoft may be setting the stage for a long-term AI platform play, where it dominates AI-powered search, productivity, and cloud computing.
However, Microsoft’s decision to give away access to o1 raises a critical question for OpenAI: Can it continue charging premium rates for AI models when competitors are offering similar or better technology at significantly lower costs—or even for free?
Adding pressure to OpenAI’s situation, the company has already moved forward with o3, an even more advanced model that introduces “private chain of thought” reasoning, which enhances logical processing and coding abilities. However, o3 is almost certain to remain behind a paywall, meaning OpenAI must now justify its pricing in a rapidly commoditizing AI market.
With DeepSeek lowering AI costs and Microsoft offering OpenAI’s own model for free, the AI landscape is shifting fast. The next few months could force OpenAI, Google, and other AI players to either radically rethink their pricing models or risk losing users to free alternatives like Microsoft’s Copilot.
For now, Microsoft has made its move, and it’s clear: the AI price war has begun.