Microsoft invests in Europe’s Mistral AI to expand beyond OpenAI

Microsoft on Monday announced a new partnership with French start-up Mistral AI – Europe’s answer to ChatGPT maker OpenAI — as the U.S. tech giant seeks to expand its footprint in the fast-evolving artificial intelligence industry.

Microsoft said in a statement that it was investing in the 2 billion euro ($2.1 billion), 10-month-old business to help it unlock “new commercial opportunities” and expand to global markets. A Microsoft spokesperson confirmed Tuesday that it was investing 15 million euros, which would convert into equity in Mistral’s next funding round.

Under the deal, Mistral’s large language models (LLM) — the technology behind generative AI products — will be available on Microsoft’s Azure cloud computing platform, becoming only the second company to host its LLM on the platform after OpenAI.

It will also see Microsoft bolster the start-up’s access to new customers as it rolls out its ChatGPT-style multilingual conversational assistant “Le Chat,” or “the cat.”

Microsoft President Brad Smith said on Monday that the deal was an “important” signal of the company’s backing of European technology.

“I really think this day is one of the most important days in terms of Microsoft’s technology support for Europe,” Smith told CNBC’s Karen Tso at the Mobile World Congress tech conference in Barcelona, Spain.

“What we’re fundamentally agreeing to a long-term partnership with Mistral AI so that they can train and deploy their next generation models for AI on our AI data centres, our infrastructure, effective immediately,” he added.

It comes as Microsoft is facing pressure from EU antitrust regulators over its reported $13 billion investment in San Francisco-based OpenAI. Asked whether the investment was an effort to appease competition concerns, Smith said the company was committed to having a diverse product offering.

“It’s important for us to show that this isn’t just about Microsoft technology, it’s not just about American products. This is going to be an engine for technology, innovation and growth in Europe as well,” he said.

Smith said the investment in Mistral AI would also see funds dedicated to research and development, including AI models for public sector services in Europe.

“I think Europe wants, needs and deserves a wide range of offerings,” Smith said.

Earlier on Monday, Spanish telecoms giant Telefónica announced that it had struck a deal to integrate Microsoft’s Azure AI Studio into its digital ecosystem, Kernel, allowing staff to interpret data using generative AI language models.

Rival tech giants such as Google and Amazon have also been ramping up their investments in AI amid a growing frenzy around the emerging technology. Global markets hit record highs last week on the back of bumper results from AI chipmaker Nvidia.