By Martin Coulter and Leigh Thomas
LONDON (Reuters) -France had no prior knowledge of Microsoft (NASDAQ:MSFT)'s partnership with tech startup Mistral AI, a finance ministry official told Reuters, denying suggestions that French lobbying for looser European AI rules had been on behalf of the U.S. tech giant.
Earlier this week, Microsoft said it had made a 15-million euro ($16 million) investment in Mistral, and would soon make the Paris-based company's AI models available via its Azure cloud computing platform.
Following the announcement, a Microsoft spokesperson told Reuters it had invested in Mistral without taking a stake. Later, Microsoft clarified that its investment would convert into equity in Mistral's next funding round, a common practice among big tech companies investing in AI startups.
Mistral and the French government had previously lobbied for looser regulations under the European Union's wide-ranging AI Act, ostensibly to avoid over-regulating smaller startups.
Some EU lawmakers on Tuesday questioned whether Mistral had lobbied on Microsoft's behalf, and the extent of the French government's knowledge of the partnership.
"That story seems to have been a front for an American-influenced big tech lobby," Kim van Sparrentak, an EU lawmaker who worked closely on the AI Act, told Reuters. "The Act almost collapsed under the guise of no rules for 'European champions', and now look. European regulators have been played."
But the French government denied any prior knowledge of the agreement.
"Yesterday, we learned of the technological partnership between Mistral and Microsoft. It's great news that a young French company has joined Microsoft's previously exclusive partnership with OpenAI on its Azure platform," a French finance ministry official told Reuters.
"France, like all other member states, took part in the writing the AI Act. At the time, we were not aware of this partnership project, but it has no specific consequences."
On Wednesday afternoon, Mistral CEO Arthur Mensch said the company remained committed to its mission as an independent European company.
"We have a reselling agreement with Microsoft, that we’re very excited about," he wrote on social media platform X. "Alongside similar partnerships, it will accelerate our growth."
Microsoft did not immediately respond to requests for comment.