What is Mistral AI and why is it partnering with Microsoft?

In a bid to diversify its AI portfolio, Microsoft has chosen to collaborate with the young French startup. We tell you why.

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Microsoft has announced a new multiyear partnership with French Large Language Model developer AI startup, Mistral, taking an undisclosed stake in the company.

The partnership announcement has brought the startup to world attention. At just 10 months of age, the tech firm is already valued at €2 billion and is one of the fastest growing AI startups globally.

The deal will see Mistral’s open and commercial language models available on Microsoft’s Azure AI platform, making it the second company to have such an offering, alongside OpenAI.

“With Azure’s cutting-edge AI infrastructure, we are reaching a new milestone in our expansion propelling our innovative research and practical applications to new customers everywhere,” celebrates Arthur Mensch, CEO of Mistral AI.

What is the partnership all about?

According to Microsoft, the partnership with Mistral AI aims to address three key objectives:

  1. Supercomputing infrastructure: Microsoft will support Mistral with Azure AI supercomputing infrastructure, delivering top class performance and scale for training new AI models.
  2. Scale to market: Microsoft and Mistral will make Mistral AI’s premium models available to customers through the Models as a Service (MaaS) in the Azure AI Studio and Azure Machine Learning model catalogue.
  3. AI research and development: both companies will explore collaboration around training purpose-specific models for select customers, including European public sector workloads.

What is Mistral and why did Microsoft choose it?

Mistral has become the poster child of AI startup growth, making it a clear candidate for partnerships with dominant tech companies like Microsoft.

Founded in May 2023 by Google DeepMind and Meta alumni Arthur Mensch, Timothee Lacroix, and Guillaume Lample, the startup landed a $113 million seed round merely four weeks after its launch.

At that stage, Mistral had neither a product nor customers, leading some to question if the French startup was a symptom of an AI investment bubble. Mistral proved critics wrong as by December 2023, it released its new model, Mistral 8x7B, an open beta access LLM that landed the firm further $415 million in a Series A funding.

The French company states that Mistral 8x7B outperforms Llama 2 70B on many benchmarks and outperforms GPT3.5 on most standard benchmarks.

From the innovation side, Mistral has become the newest addition to Microsoft’s portfolio because of its emphasis on creating open source LLMs.

“At Mistral AI, we believe that an open approach to generative AI is necessary,” explains the Mistral team.

“Community-backed mode development is the surest path to fight censorship and bias in a technology shaping our future. We strongly believe that by training our models, releasing them openly, and fostering community contributions, we can build a credible alternative to the emerging AI oligopoly.”

While Mistral’s models have typically been open source, the partnership with Microsoft means the French company can now explore more commercial opportunities and continue to have sustainable growth.

Why now?

With a deep pool of innovative startups to pick from, it doesn’t necessarily come as a surprise that Microsoft has picked Mistral. Its quick growth and high performance of its LLMs make it a prime candidate.

Looking closer at the politics of Silicon Valley and AI regulation, however, tells a tale that goes beyond the simple picture of fostering innovation.

The investment in Mistral comes months after Microsoft’s key startup partner, OpenAI, experienced a rocky leadership period after the firing and rehiring of CEO Sam Altman. The investment in Mistra could be understood as a strategic move to diversify the portfolio to lower risk.

The murky waters of OpenAI’s board were also marked by regulatory criticism of the high stakes Microsoft had in the ChatGPT creator, mounting to a hefty 49% stake.

To some analysts, the move is a way to appease regulators and demonstrate Microsoft is not inadvertently creating an AI monopoly that disproportionately favours certain models and technologies.

Investing in startups

The partnership is a showcase of how symbiotic the relationship is between big tech and startups in the field of AI innovation.

On the one hand, specialised and agile startups like Mistral AI are optimally positioned to supercharge innovation and quickly bring new products to market. On the other hand, big tech companies have endless resources and expertise to scale up those products and continue to nurture innovation.

While some pessimists read the continued growth of companies like Meta and Microsoft as an impending AI oligopoly, the reality is big tech needs AI startups to stay ahead of the innovation curve.

Written by:
Fernanda is a Mexican-born Startups Writer. Specialising in the Marketing & Finding Customers pillar, she’s always on the lookout for how startups can leverage tools, software, and insights to help solidify their brand, retain clients, and find new areas for growth. Having grown up in Mexico City and Abu Dhabi, Fernanda is passionate about how businesses can adapt to new challenges in different economic environments to grow and find creative ways to engage with new and existing customers. With a background in journalism, politics, and international relations, Fernanda has written for a multitude of online magazines about topics ranging from Latin American politics to how businesses can retain staff during a recession. She is currently strengthening her journalistic muscle by studying for a part-time multimedia journalism degree from the National Council of Training for Journalists (NCTJ).

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