Microsoft Strikes Deal With France’s Mistral, OpenAI Rival

(Bloomberg) -- Microsoft Corp., under mounting political scrutiny globally for its deep ties to OpenAI, has cut a deal with the startup’s primary competition in Europe. 

On Monday, the French company Mistral AI announced a “strategic partnership” with Microsoft that includes making the startup’s latest artificial intelligence models available to customers of Microsoft’s Azure cloud. Mistral develops algorithmic models similar to those from OpenAI used for chatbots and other AI services, but Mistral models are open-source and shared openly.

With the announcement, the company also unveiled a model, called Mistral Large, that it says has “unique reasoning capacities” and is fluent in five languages. Microsoft said it has made a small investment in the French firm but declined to say how much. 

In artificial intelligence, Microsoft has worked primarily with OpenAI, investing roughly $13 billion in the California startup. That sponsorship has helped make OpenAI a “significant new competitor in the technology industry,” Microsoft President Brad Smith said in a speech Monday at the Mobile World Congress in Barcelona. “Innovation and competition will require an extensive array of similar support for proprietary and open-source AI models, large and small, including the type of partnership we are announcing today with Mistral AI.”

Microsoft’s ties to OpenAI, as its chief financial backer and business partner, is the subject of antitrust probes in the European Union and the UK. Microsoft has said that the companies operate independently.

Smith’s speech primarily outlined the software giant’s “AI Access Principles” — a series of pledges to make AI models and tools “broadly available” and foster competition. Additionally, he touted $5.6 billion in new data center investments Microsoft has made in Europe in the last two weeks, including a €3.2 billion ($3.5 billion) commitment in Germany.

Mistral, formed in early 2023 by former engineers at Google’s DeepMind and Meta Platforms Inc., has positioned itself as a plucky European champion challenging US dominance in the field. In December, the startup closed a $415 million round from a range of investors, including Salesforce Inc. and Nvidia Corp. The financing valued the firm at about $2 billion.

(Updates with comments from Microsoft president, starting in fourth paragraph.)

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