The European Commission, the EU’s top antitrust watchdog, plans to probe into Microsoft’s [MSFT:US] new partnership with French artificial intelligence (AI) startup Mistral AI, as reported by Politico on February 27. On the previous day, Microsoft announced a strategic partnership with Mistral, involving a EUR15m investment in the startup. As part of the deal, Mistral will gain access to Microsoft’s supercomputer to train and run its latest AI models, which will be available to customers of Microsoft’s Azure cloud. Considering Microsoft’s strong connections to OpenAI, its further expansion in the AI sector has raised regulators’ concerns regarding the concentration of power by the tech giant. A European Commission spokesperson revealed that regulators will evaluate Microsoft’s investment into Mistral after receiving a copy of the agreement.

Before the deal with Mistral, Microsoft had already faced antitrust investigations from US, EU, and UK regulators due to its multi-billion-dollar investment in OpenAI. Although the US tech giant initially clarified that it did not own a stake in Mistral, meaning that it does not have control over the company, it later acknowledged that its investments would convert into equity in Mistral’s next round of financing. According to the European Commission, it plans to include the deal as part of its broader review of the generative AI market, which will examine agreements between large tech companies and generative AI developers. Meanwhile, France, Italy, and Germany are advocating for exemptions for companies developing generative AI models, aiming to protect European startups like Mistral from over-regulation.

Sources:

https://www.politico.eu/article/european-commission-sets-its-sights-on-microsofts-ai-deal-with-frances-mistral/

https://www.reuters.com/technology/microsofts-deal-with-mistral-ai-faces-eu-scrutiny-2024-02-27/

https://www.bloomberg.com/news/articles/2024-02-27/microsoft-s-mistral-ai-investment-to-be-examined-by-eu-watchdog

https://www.washingtonpost.com/business/2024/02/27/european-union-microsoft-mistral-competition-antitrust/b24b8354-d564-11ee-82ad-c2391b06a8f5_story.html