By Aditya Soni and Deborah Mary Sophia (Reuters) -Days after Chinese upstart DeepSeek revealed a breakthrough in cheap AI computing that shook the U.S. technology industry, the chief executives of Microsoft and Meta defended massive spending that they said was key to staying competitive in the new field.

Chinese AI startup DeepSeek's model led to increased scrutiny on Microsoft's AI spending.

Chinese startup DeepSeek claims to offer competitive AI models at lower costs, raising doubts about U.S. tech giants' investments in AI. Microsoft and Meta defend their significant spending, highlighting its importance for long-term strategic advantage amidst increasing demand for AI solutions.

Microsoft has moved surprisingly quickly to bring R1 to its Azure customers.

Microsoft has brought one of DeepSeek's models to its cloud, and says that 'distilled' versions of the model will come to Copilot+ PCs soon.

Microsoft has made Chinese startup DeepSeek's R1 artificial intelligence model available on its Azure cloud computing platform and GitHub tool for developers, the U.S. company said on Wednesday.

DeepSeek is causing havoc throughout the AI industry. U.S.-based tech companies that have heavily invested in AI saw their stocks take a tumble this week after the China-based startup released a new AI model on par with OpenAI's latest model, yet much cheaper to train — plus, DeepSeek made it free and open source.

Sources at Open AI believe DeepSeek unlawfully distilled data from ChatGPT, Open AI and Microsoft begin investigation.