DeepSeek, however, was not the first startup competing with tech giants. The IT market was occupied by monopolists like Meta, Google, and Adobe – all of them have almost limitless resources. In recent years, a new trend has emerged: small, agile startups successfully challenge these giants. They use innovation, expertise, and a deep understanding of markets to compete with their larger rivals. 

Companies like Canva, Notion, and Holiverse have also, whether intentionally or unintentionally, challenged the giants and achieved success. However, the example of DeepSeek has become the most striking and illustrative.

The DeepSeek phenomenon

DeepSeek has presented a suite of AI tools that is at least similar to products of industry heavyweights like Google, Microsoft, and OpenAI. However, DeepSeek’s advantage is not just the sophistication of its technology but the extremely low development cost. The company spent less than $10 million to bring the product to market – that is nothing in comparison to billions, spent by its competitors on similar projects.

Such a budget has shocked the IT industry. How could a relatively unknown startup achieve so much with so little? The answer lies in DeepSeek’s operational model, which prioritises efficiency and innovation over huge budgets and bureaucratic procedures. By leveraging open-source tools, outsourcing non-core functions, and focusing on a narrow set of high-impact features, DeepSeek has demonstrated that it’s possible to compete with the major players.

New rules of the game

DeepSeek’s success has forced the tech industry to accept the bitter truth: cost of the product development at major corporations is overpriced. For years, tech giants have justified their massive R&D budgets by the complexity of their projects, but DeepSeek’s example shows that much of this expenditure is unnecessary.  

“DeepSeek has shown that you don’t need a billion-dollar budget to build world-class AI,” says Sarah Thompson, a tech analyst at Gartner. “Their approach is a wake-up call for the industry. If other companies can replicate their model, we could see a significant reduction in the cost of IT products across the board.” 

This case has already begun to reshape the market landscape. Investors are reasonably sceptical of startups with high performance results, while tech giants need to justify and cut their spending. In the long run, this could lead to a more efficient and competitive market, with lower prices and greater opportunities for smaller players.  

The shocking effect on IT costs

The implications of DeepSeek’s low-cost model extend far beyond the AI sector, from cybersecurity to enterprise software. If other companies can achieve similar efficiencies, the entire IT industry could face the same challenge. For decades, the high development cost has been a major factor to deter smaller firms, allowing dominant players to control the market. But if Deepseek’s approach becomes the norm, the market could change dramatically.

If the development cost can be reduced by an order of magnitude, as DeepSeek has demonstrated, the developers can share savings, at least partially, with customers in the form of lower prices. This would make IT product development more accessible to small and medium-sized businesses, which in turn makes the market more competitive.

Notion, Canva, Holiverse as competitors of tech giants

DeepSeek was not the first IT company to successfully compete with industry giants. Among companies who have succeeded on the field of a much stronger competitor, we can, for example, mention Notion, Canva and Holiverse. Some of them have grown up from startups into multi-billion dollar corporations.

When Notion was founded in 2013, the productivity software market was largely controlled by Microsoft, with its Office Suite. Notion, however, developed a more flexible, user-friendly platform that combined several functions into a single tool.

By focusing on simplicity and customisation, Notion quickly gained traction among startups, freelancers, and creative professionals. Its growth was fuelled by a passionate community of users who shared templates and workflows, turning customers into brand ambassadors.

Currently, Notion is valued at over $10 billion and is a serious competitor to Microsoft’s productivity tools. Its success demonstrates how startups can disrupt established markets by addressing market demands that larger companies overlook.

Challenging the tech giants

For years, Adobe dominated the graphic design industry with its powerful but complicated software. Canva, a startup founded in 2013 declared a mission “to make design accessible to everyone”. By offering an intuitive, drag-and-drop interface and a vast library of templates, Canva appealed to non-designers – small business owners, educators, and social media managers – who found Adobe’s tools overwhelming.

Canva’s freemium model and focus on ease of use helped it grow rapidly, amassing over 100 million monthly active users by 2023. The company’s valuation soared to $40 billion, making it one of the most successful startups of the decade.

Canva’s rise highlights how startups can challenge incumbents by democratizing access to tools and services that were once the domain of professionals.

In 2024, the fintech startup Holiverse, founded by entrepreneur Lado Okhotnikov, made waves by launching its own metaverse platform. What made this announcement remarkable was not just the ambition of the project but the fact that Holiverse had inadvertently positioned itself as a competitor to Meta, which had already invested billions of dollars into its metaverse ambitions.

While Meta focused on creating a broad, all-encompassing virtual world, Holiverse took a different approach. It targeted niche communities, offering tailored experiences for gamers, artists, and financial enthusiasts. By integrating blockchain technology and decentralised finance (DeFi) into its metaverse, Holiverse attracted a loyal user base that valued transparency and ownership – features that Meta’s centralised model struggled to provide.

As a result, Holiverse didn’t just survive in the shadow of a tech giant; it thrived. Its success underscores how startups can outmaneuver larger competitors by focusing on underserved markets and leveraging cutting-edge technologies.

Challenges ahead

Of course, DeepSeek’s model is not ideal. The company’s approach may work well in the early stages of development, but scaling up can be more difficult. DeepSeek will need to invest in infrastructure, customer support, and marketing – areas where larger companies have a clear advantage.  

There’s also the question of whether DeepSeek’s success can be replicated in other sectors. AI is a unique field where basic technologies are open-source. In other industries achieving similar cost savings may be more difficult.  

Finally, there’s the risk that DeepSeek’s low-cost model could make companies reduce costs at the expense of quality and innovation. 

A new era for IT? Seems, yes…

Despite these challenges, DeepSeek’s emergence marks a turning point for the IT industry. By proving that world-class technology can be developed with a minimal cost, the company has opened the door to a more competitive and accessible market.  

For consumers, this could mean lower prices and greater choice. For businesses, it could mean new opportunities for growth. And for the IT giants, it could mean a chance for reshaping their business approach. 

The examples of Notion, Canva, and Holiverse reinforce the trend so clearly demonstrated by DeepSeek. And that’s a shock that the industry won’t forget soon.  

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