In a significant development, Mistral AI, a Parisian AI startup specializing in foundational models, unveiled its latest creation: Mistral Large, a formidable language model poised to challenge established players like GPT-4 and Claude 2. This announcement was accompanied by news of a strategic partnership with tech giant Microsoft, involving a €15 million investment and a distribution agreement for Azure.
However, there’s more to this story than meets the eye. Despite the substantial investment, Microsoft’s stake in Mistral AI remains relatively modest, as the valuation of the French startup remains unchanged. This arrangement ensures that Microsoft’s ownership percentage will depend on the valuation of Mistral AI’s next funding round.
Mistral AI’s journey has been nothing short of remarkable. In December 2023, the company secured an impressive €385 million in funding, led by Andreessen Horowitz, propelling its valuation to approximately $2 billion. This followed an earlier seed round of $112 million shortly after its inception.
The unveiling of Mistral Large marks a departure from the company’s previous open-source approach. This flagship model will be accessible exclusively through Mistral’s own API platform, catering to developers seeking cutting-edge language processing capabilities.
The partnership with Microsoft promises to expand Mistral AI’s reach significantly. By integrating Mistral’s models into Azure’s model catalog, Azure customers gain access to a wider range of AI tools, complementing offerings from OpenAI and Meta. This strategic move opens up new avenues for innovation and collaboration within the Microsoft ecosystem.
However, this investment has drawn the attention of regulatory bodies, particularly the European Commission. The EC is closely scrutinizing the deal between Microsoft and Mistral AI, given Microsoft’s existing relationship with OpenAI, which is under investigation by EU and UK authorities.
Despite these regulatory hurdles, Mistral AI’s aspirations to become a European AI champion remain undeterred. The company’s closed-source approach and growing list of American backers, however, raise questions about its ability to maintain its European identity.
As the AI landscape continues to evolve, Mistral AI’s journey serves as a reminder of the intricate interplay between innovation, competition, and regulatory oversight. The company’s success will depend on its ability to navigate these complexities while delivering on the promise of its groundbreaking language model.