As part of the partnership, Microsoft is investing €15 million ($16.3 million at today’s exchange rate) in the French startup. Mistral AI says that this an addition to the Series A funding round that was announced a couple of months ago — it could be considered as a Series A extension. It means that the valuation of Mistral AI isn’t changing following this investment.

Mistral AI reached a valuation of about $2 billion following its most recent funding round in December 2023. At the time, the company raised €385 million (around $415 million), with Andreessen Horowitz (a16z) leading the Series A investment round. The company had previously raised a $113 million seed round just a few weeks after its inception.

Microsoft says that this investment will officially convert into equity in Mistral’s next funding round. However, as Microsoft’s investment is based on the Series A valuation, it means that Microsoft will own less than 1% in equity in the French AI company.

Yesterday, Mistral AI unveiled Mistral Large, its flagship large language model that has been designed to rival other top-tier models, such as GPT-4 and Claude 2. Unlike previous Mistral AI releases, Mistral Large isn’t open source. Developers can access the model through Mistral’s own API platform.

Mistral AI and Microsoft also signed a distribution partnership deal for Azure. As a result, Mistral AI will likely attract more customers with this new distribution channel.

It also means that Azure customers can access Mistral’s models through Azure’s model catalog. Customers who want to remain in the Microsoft ecosystem have another option in addition to OpenAI’s models. Meta’s Llama models are also available on Azure.

With this investment, Microsoft is now an investor in OpenAI’s capped profit subsidiary and Mistral AI. Microsoft’s relationship with OpenAI is under scrutiny from EU and U.K. regulators.

This new investment has attracted the attention of the European Commission. A spokesperson told TechCrunch that the EC will analyze the investment deal between Microsoft and Mistral AI as part of its ongoing scrutiny procedure between large tech companies and generative AI companies.

That’s why Microsoft didn’t make a big deal about it. As for Mistral AI, the so-called European AI champion looks more and more like its American competitors with a closed source approach and a long list of American backers.