Why is French AI startup Mistral in focus?

A relatively new European start-up founded in 2023 by former researchers from DeepMind and Meta is grabbing headlines this week, thanks to its association with tech giants like Microsoft and Samsung.

Paris-based artificial intelligence (AI) start-up Mistral, which develops large language models (LLMs), has accelerated its pace to establish itself as a notable rival to US peers like OpenAI and Anthropic.

In a move that can shake the dominance of US players in the AI space, Microsoft announced that it has expanded its partnership with the French company with a multibillion-dollar agreement to increase AI compute capacity in Europe.

Mistral’s latest models would now be available across Microsoft’s AI platform for enterprise customers, particularly those in regulated industries.

As part of the agreement, Microsoft Azure customers will be able to develop software using Mistral’s data centres in France. This will give Microsoft more capacity in Europe, while giving regulated industries an alternative to US-controlled infrastructure.

In return, a deal with one of the world’s biggest software companies will help Mistral expand distribution of its technology.

Samsung, too, comes into the picture

Just when the markets were digesting this news, another big name popped up and added momentum to the Mistral story.

According to a Financial Times report, South Korean tech giant Samsung Electronics is exploring a significant strategic investment in the French AI startup to the tune of €1 billion.

This could value Mistral at about a whopping €20 billion.

The report added that Swedish investor EQT’s Scaleup Europe Fund is also in discussion to participate in the fundraising round.

Samsung’s investment in Mistral is significant as it gives the company more gravitas. Analysts fear that though Microsoft’s funding infrastructure increases Mistral’s reach, the start-up can also become dependent on a single gatekeeper for compute and sales.

However, Samsung coming in as a strategic backer gives Mistral more than one route to market and more than one source of support, as noted by an analyst.

Media reports also noted that Microsoft and Samsung shifting their attention to European startups like Mistral underscores the intent to reduce dependence on US technology. This diversification would give other countries greater say in their future economy.

Also, for European governments and regulated industries, having a credible local model provider with multiple powerful partners could reduce the risk of regulatory or diplomatic hurdles.