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Microsoft’s deal with French tech startup Mistral AI has sparked outrage in the European Union, with lawmakers demanding an investigation into what they see as a concentration of power by the tech giant.
Antitrust authorities are already scrutinizing Microsoft’s partnership with OpenAI, maker of ChatGPT, and the European Commission previously warned that the relationship between the companies could violate EU competition rules.
But lawmakers were caught off guard on Monday when Microsoft announced it had made a 15 million euro ($16 million) investment in Paris-based Mistral and would soon make the company’s artificial intelligence models available. company through its Azure cloud computing platform.
A Microsoft spokesperson told Reuters on Monday that it invested in Mistral without having any stake. Microsoft later clarified that its investment would be converted to equity in the company’s next funding round, a common practice among large technology companies that invest in AI startups without putting a valuation on it.
Mistral was last valued at €2 billion in a funding round in December led by investors including Andreessen Horowitz and Lightspeed.
Facing regulatory pressure over its multibillion-dollar investment in OpenAI late last year, Microsoft sought to clarify that it did not actually own a stake in the company and therefore could not control it. Microsoft has gained access to OpenAI’s cutting-edge models and rights to share in OpenAI’s profits in exchange for the investment, which is under antitrust scrutiny in both the EU and the United States.
The Mistral deal has drawn renewed attention in Brussels, where lawmakers spent months last year hashing out the details of the bloc’s sweeping AI law.
Behind closed doors, Mistral pushed for exemptions for some artificial intelligence systems, warning that overly strict laws would hamper European startups’ chances of competing with U.S.-based giants. Mistral’s deal with Microsoft has led some lawmakers to question the company’s motivations.
“What is emerging further shows that it was good not to dilute our ambition on the security of GPAI (general purpose AI) models with systemic risks, after a legitimate but strong lobby from companies like Mistral,” said Brando Benefei, member of the European Parliament (MEP), which oversaw the drafting of the AI Law.
EUROPEAN CHAMPIONS?
Along with Germany and Italy, France also pushed for exemptions for companies that make generative AI models, to protect European startups like Mistral from overregulation.
“That story appears to have been a front for the big US-influenced tech lobby,” said Kim van Sparrentak, an MEP who worked closely on the AI Law. “The law almost collapsed under the pretext that there were no rules for ‘European champions’, and look now. European regulators have played.”
A third MEP, Alexandra Geese, told Reuters the announcement raised legitimate questions about Mistral and the French government’s behavior during the negotiations.
“There is a concentration of money and power here like the world has never seen, and I think this deserves an investigation.”
The French government did not immediately respond to a request for comment.
Microsoft and Mistral AI declined to comment.
Max von Thun, European director at the Open Markets Institute, a nonprofit focused on strengthening antitrust law, said the EU should act quickly to investigate the association.
“This announcement exposes as a farce Mistral’s efforts to derail the AI Law based on its status as a supposed ‘European champion’.”