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EU Examines Microsoft’s Investment in Mistral AI

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The European Union is divided over Microsoft’s recent investment in the French tech firm Mistral AI, and requests have been made for an investigation into what some see as the computer giant’s consolidation of power. Microsoft’s partnerships, particularly its one with OpenAI, are already being investigated by antitrust regulators for possible breaches of EU competition laws.

EU parliamentarians were taken aback when Microsoft revealed its 15 million euro investment in Mistral, a Paris-based company, along with its intentions to incorporate Mistral’s AI models into its Azure cloud computing platform. An explanation later disclosed that the investment will convert into stock in Mistral’s next fundraising round—a standard process among big tech corporations investing in AI startups—despite an earlier statement from a Microsoft representative claiming that the investment would not involve an interest in Mistral.

Mistral, which raised $2 billion in investment in a recent round, has been a strong advocate for exemptions from the EU’s AI Act, citing worries that strict rules will make European firms less competitive than their American rivals. The legislators are suspicious of Mistral’s true motivations in light of this Microsoft arrangement.

Concerning possible conflicts of interest, Brando Benefei, a member of the European Parliament who worked on the AI Act’s drafting, stated, “What is emerging shows even more that it was good not to water down our ambition on the safety of GPAI models with systemic risks, following legitimate but strong lobbying from companies like Mistral.”

Together with Germany and Italy, France pushed for exclusions for businesses creating generative AI models, supposedly to protect European firms like Mistral from overreaching regulations. Some MEPs, however, think that this story was a front for the power of IT lobby organizations in the United States.

A prominent AI Act supporter, MEP Kim van Sparrentak, expressed her disapproval with the state of affairs by saying, “The Act nearly fell apart under the pretense that there were no regulations for ‘European champions,’ and now look. European authorities have been duped.

An probe of Mistral’s transactions and the French government’s conduct during the AI Act discussions has been demanded in response to the disclosure. Another MEP, Alexandra Geese, expressed worries about the concentration of power and money and urged authorities to look into the issue more thoroughly.

Microsoft and Mistral AI both declined to respond when contacted, while the French government said nothing at all about the matter. EU authorities should move quickly, according to Max von Thun of the Open Markets Institute, who said, “This announcement exposes as a farce Mistral’s efforts to derail the AI Act based on its status as a supposed ‘European champion’.”

The EU must strike a balance between innovation and competition while protecting against monopolistic behaviors as scrutiny mounts, highlighting the difficulties in regulating the quickly changing field of artificial intelligence.

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