When it comes to the ongoing rivalry in the AI sector, the most significant distinction between DeepSeek and OpenAI lies in cost-effectiveness. DeepSeek, as an open-source initiative, offers a more affordable option compared to OpenAI’s proprietary models.
As we move past surface-level distractions like internet memes and fluctuating stock markets, let’s delve into how the competition between DeepSeek and OpenAI is set to reshape the technology and AI landscape.
This guide will explore why investors are intrigued by this China-based AI model, developed as a side project for $5.5 million within just two months.
Key Insights: DeepSeek vs OpenAI
- Open Source Advantage: DeepSeek is open-source, catering effectively to niche applications.
- Enhanced Reasoning: The DeepSeek R1 model exhibits superior reasoning abilities when stacked against OpenAI’s o1 model.
- Concerns About Privacy: While DeepSeek impresses, it does provoke questions regarding user privacy.
Quick Comparison: DeepSeek vs OpenAI
Here’s a concise overview that highlights the distinctions between DeepSeek and OpenAI.
| Criteria | DeepSeek | OpenAI |
|---|---|---|
| Founders | Liang Wenfeng | Elon Musk, Sam Altman, Ilya Sutskever, Greg Brockman and more |
| Establishment | May 2023 | Groundwork for ChatGPT: 2018 |
| Development Cost | $5.5 million | Over $100 million |
| Headquarters | Hangzhou, China | San Francisco, USA |
| Leading Model | DeepSeek R1 | OpenAI o1 |
| Pricing | Free | $20/month |
| API Costs | Input token: $0.14/million | Input token: $15/million |
| Output token: $2.19/million | Output token: $60/million | |
| Best For | Advanced reasoning | Multi-purpose AI assistant |
While DeepSeek appears appealing at first glance, particularly regarding its lower cost and free chatbot-like capabilities, the two systems serve markedly different purposes. Let’s analyze both platforms’ free plans to provide a fair assessment.
Overview of DeepSeek
Launched in early 2025, DeepSeek’s cutting-edge model showcases performance that either matches or exceeds that of OpenAI’s o1 model. This AI newcomer has garnered attention for its impressive metrics, cost-effectiveness, and open-source MIT licensing.
DeepSeek began as a side venture for its founder, who primarily manages a hedge fund, and was developed at a remarkably low cost of nearly $6 million using NVidia’s H800 chips.
Following its launch, DeepSeek caused a significant ripple in the US stock market, where investors reacted by erasing a trillion dollars in value, underscoring that quality AI can be developed with far less investment.
How to Access DeepSeek
DeepSeek is available for free via its website and mobile application for iOS and Android users grounded in the DeepSeek V3 framework. To leverage the advanced R1 model, users must purchase access via its API or through partnerships with services like Perplexity, which now includes DeepSeek R1 in its offering.
The world's most powerful reasoning model, DeepSeek R1, with reasoning traces, is now on Perplexity, for supporting your daily deep web research! Enjoy! Limits will be increased during the day. Updates coming shortly. pic.twitter.com/ZDSUKnfmyK
— Aravind Srinivas (@AravSrinivas) January 27, 2025
Using DeepSeek R1 Through Perplexity
For those prioritizing data privacy and security, Perplexity allows utilization of the DeepSeek R1 model on their servers located in the USA. Users on Perplexity have access to:
- 3 Queries with a basic free account.
- 25 Queries for Pro users.
Simply log into your Perplexity account, and you can select the DeepSeek R1 model next to the prompt entry field.
Overview of OpenAI
While DeepSeek seeks to disrupt OpenAI’s long-standing market presence, OpenAI continues to evolve its offerings. The recently launched o1 model is recognized for its adeptness in resolving complex problems requiring advanced reasoning.
In January 2025, OpenAI also introduced the “Operator” capability, which utilizes an external browser to carry out tasks like booking travel, finding campsites, and ordering groceries—all features still in preview mode. OpenAI’s rich toolkit comprises:
- Voice and live chat assistance.
- AI-generated images and videos.
- A comprehensive database with a knowledge cutoff date of June 2024.
OpenAI o1 solves a complex logic puzzle. pic.twitter.com/rpJbh8FkAg
— OpenAI (@OpenAI) September 12, 2024
Side-by-Side Testing: DeepSeek vs OpenAI
Both systems cater to differing user needs. DeepSeek specializes in targeted functions, while OpenAI provides a broad, multipurpose assistant. Here’s how they compare on several key points:
1. User Interface
DeepSeek boasts a straightforward user interface, while OpenAI’s latest updates have enhanced its web interface to support web searches, improving user experience significantly.
2. Reasoning Tests
In a classic dilemma—“What came first, the chicken or the egg?”—DeepSeek’s R1 model took 29 seconds crafting a deep, well-considered response, explaining its thought process in detail. Conversely, ChatGPT provided a swift answer in just 5 seconds but failed to elaborate on its reasoning.
3. Architectural Differences
DeepSeek employs a unique open-source architecture focused on reinforcement learning from scratch, allowing for robust reasoning capabilities. OpenAI relies on a combination of supervised learning and reinforcement learning (RLHF), which limits flexibility for developers seeking to customize models.
4. Performance Metrics
In comparative performance tests, DeepSeek R1 matched or outperformed OpenAI’s premier model in common AI evaluations, demonstrating superior cost-efficiency.
5. Result Transparency
DeepSeek tends to avoid addressing sensitive topics related to political issues, particularly those involving China, while OpenAI has no similar restrictions on content.
6. Data Security
Given DeepSeek’s origins in China, questions about data privacy and security loom large. Their privacy policy suggests that user data may be collected and stored in Chinese servers, raising concerns. OpenAI, on the other hand, prioritizes user privacy and allows users to opt-out of data collections.
The Impact of DeepSeek vs OpenAI
DeepSeek presents a serious challenge to OpenAI’s established dominance, with financial ramifications already evident in the stock market. NVIDIA, for instance, saw an 18% decline in stock price following DeepSeek’s debut.
Businesses are increasingly viewing DeepSeek as a viable, cost-effective alternative that allows for custom model development. The addition of DeepSeek R1 to platforms like Perplexity signals its growing influence in the marketplace.
Is DeepSeek Superior to OpenAI?
In many areas, particularly regarding its open-source, cost-effective nature and performance metrics, DeepSeek appears to surpass OpenAI’s offerings.
Pros and Cons Overview
DeepSeek – Advantages & Disadvantages
- Pros: Cost-effective, open-source flexibility, tailored for specific tasks, rapid processing.
- Cons: Potential biases, server overload issues, privacy ramifications.
OpenAI – Advantages & Disadvantages
- Pros: Recent advancements in knowledge, extensive training datasets, adaptable assistant functionalities.
- Cons: Non-open-source nature limits flexibility, potential high costs for expansive use.
Conclusion: The Rise of DeepSeek
With its notable entrance into the market, DeepSeek poses a substantial threat to OpenAI’s preeminence. Although it currently lacks certain sophisticated features like image and video generation, the potential for development is evident. As both platforms continue to innovate, users stand to reap the benefits from this compelling competition.
The advent of DeepSeek’s R1 model hints at an exciting future for artificial intelligence, where the competition promises to shape the landscape significantly.