Microsoft’s deal with Mistral AI faces EU scrutiny

Microsoft’s (MSFT.O) deal with French tech startup Mistral AI is facing scrutiny in the European Union.

On Monday, Microsoft announced it would soon make Mistral’s AI models available through its Azure cloud computing platform. The company said it had also invested in Mistral, but held no equity.

“We’ve made a 15 million euro investment in Mistral AI which would convert into equity in the company’s next funding round,” a Microsoft spokesperson told Reuters.

The deal has raised eyebrows in Brussels. Throughout negotiations over the EU’s wide-ranging AI Act, Mistral lobbied for looser rules for some models, with advocates warning that strict rules risked undermining European companies’ ability to compete with big tech.

The European Commission told Reuters on Tuesday that it would analyse the Microsoft-Mistral deal, as part of its ongoing scrutiny of big tech’s AI partnerships. The EU’s executive arm previously warned that Microsoft’s backing of US-based OpenAI may be subject to EU merger rules.

“What is emerging shows even more that it was good not to water down our ambition on the safety of GPAI (general purpose AI) models with systemic risks, following legitimate but strong lobbying from companies like Mistral,” said Brando Benefei, a member of the European Parliament who oversaw the drafting of the bloc’s landmark AI Act.

“This story that is emerging will need to be further investigated.”

Microsoft and Mistral AI declined to comment.