What’s behind Microsoft’s partnership with French company Mistral?

Microsoft has inked a “multi-year partnership” with the buzzy French company Mistral in what appears to be its first such dalliance with a foundation model startup not named OpenAI.

The deal will bring the startup’s large language models (LLMs) to Microsoft’s Azure cloud platform, including an exclusive release this week of a new flagship system, Mistral Large, Microsoft said in a blog post. Mistral Large is designed to compete with megamodels like GPT-4.

Microsoft is also reportedly making an investment of 15 million euros—about $16 million—which will convert into equity in Mistral upon its next funding round.

The partnership could signal a willingness on the part of Microsoft to branch out beyond its blockbuster partnership with OpenAI, to which it has reportedly committed $13 billion. Despite being a little less than a year old, Mistral has already raised a whopping $563 million at a valuation of over $2 billion, according to Pitchbook.

In the crosshairs: The agreement attracted scrutiny from European regulators, who are on high alert for such arrangements since indicating they are examining alliances between tech giants and flush AI startups. European Commission spokesperson Lea Zuber confirmed to Politico Europe that the body will look into the deal.

To open, or not to open: While Mistral has built some of its nascent reputation on a commitment to open-weight models—or LLM releases that make more code freely available—the company is notably not making weights available for its new Mistral Large. Some online commentators also noticed that Mistral appears to have toned down the language around openness on its website, nixing a mention of “open-weight models” in the last couple weeks.

Still, bringing Mistral’s smaller open-weight models to Azure could offer users of the cloud service more open options compared to OpenAI’s more closed-off models. Azure also already offers Meta’s Llama models, which are similarly open-weight.

The Microsoft announcement also comes a week after Amazon Web Services said it would be adding Mistral’s models to its Amazon Bedrock platform, which makes foundation models available to customers.

“Street cred?” That’s what Gartner Distinguished VP Analyst Jason Wong responded when asked what Microsoft stands to gain from this deal that it may not from OpenAI.

He elaborated, “Microsoft wants to be open. They want to shed the old image of Microsoft being closed and proprietary and they’ve come a long way, in recent years, under [CEO Satya] Nadella, to [embrace] technologies that are not from Microsoft.”

Study abroad: Microsoft could stand to gain more of a foothold in Europe as part of this investment. Microsoft said in the announcement that the two companies will work together building “custom purpose-specific” models to serve “European public sector workloads,” for instance.

Wong said at least some of Mistral’s differentiation is about “geographic preferences.”

“Mistral seems to [have] more adoption, more interest in Europe,” Wong said. “So if you’re looking at the regulatory landscape of AI, we’re starting to see shifts in the respective regions like the European regions as compared to North America, and compared to Asia-Pacific, Australia, and New Zealand. So I think regional variations and adoption of models could be coming.”