What does Microsoft’s investment in Mistral mean for OpenAI?

By Oliver Stainforth, Head of Content & PR, Go Up 

While the large language model (LLM) market is still in its infancy and the race for dominance is still very much on, OpenAI has been making a strong case as the de facto leader. 

They were the first kid on the block with the coolest toys, capturing the public’s attention with groundbreaking models like GPT-3. This headstart allowed them to refine their technology and gain a significant advantage.

But, the LLM landscape is constantly evolving, and recent advancements threaten to disrupt the existing hierarchy. New players are emerging with innovative approaches, while established companies are making substantial investments in LLM development.

Microsoft, who have a multi-billion alliance with OpenAI themselves, have started to cast admiring glances elsewhere. Most recently, their head has been turned by French AI firm Mistral — one of Open AI’s biggest competitors in mainland Europe — investing in a $16 million multi-year partnership. 

This deal will see Mistral’s open and commercial language models available for use on Microsoft’s Azure AI platform, following in the footsteps of OpenAI and becoming the second company to offer a model on Azure.

But what does this new partnership mean for OpenAI? Has Microsoft lost faith in its first child?

Microsoft is under scrutiny from the European Commission 

The collaboration between Microsoft and Mistral is certainly eyebrow-raising — particularly amid the ongoing scrutiny Microsoft faces from the European Commission regarding its association with OpenAI.

The European Commission is investigating how agreements between major AI companies affect competition in the market, and whether this prevents the emergence of innovative new players. 

Launched on January 9th, the investigation involves “requests for information sent to several large digital players,” according to the Commission. The Commission has specifically identified Microsoft as a company of interest, evaluating whether its investment in OpenAI falls under the EU Merger Regulation.

Mistral is the most direct competitor to OpenAI in Europe, so this could be interpreted as a strategic move by Microsoft to dispel the image that it’s blocking competition, as well as downplaying its financial stake in OpenAI.

However, despite the ongoing legal undercurrent, it’s highly unlikely that Microsoft is turning its back on OpenAI. Rather, its partnership with Mistral signifies its attempts to solidify its dominance in the cloud computing market with a diversified AI portfolio.

Portfolio diversification demonstrates Microsoft’s ambition

It’s been well documented that AI-powered Bing search hasn’t made a dent in Google’s market share, so it’s little surprise to see Microsoft exploring other avenues to gain a stronger foothold and carve out a unique space within the competitive AI market. 

With Mistral, Microsoft likely has strategic ambitions for its Azure AI platform. The collaboration is laying the groundwork for Azure to become a leading “model garden” in the AI landscape. Mistral has unveiled Mistral Large, its latest AI model, designed to directly compete with OpenAI’s GPT-4. Unlike some previous Mistral models, this won’t be open-source and is only available on Mistral’s own infrastructure, hosted in Europe, or through Azure AI Studio and Azure Machine Learning.

Offering various AI models to clients isn’t unique to Microsoft. Most cloud providers, including AWS and Google, provide managed services granting access to different models and simplifying their use. To stand out, these providers compete to be the first to offer highly sought-after models.

Bringing Mistral Large to Azure makes the platform an attractive option for users working with other Mistral models due to the potential for seamless integration and unified workflows.

While Azure has offered various models for some time, Microsoft’s close association with OpenAI might overshadow this broader aspect of their AI offerings. This collaboration with Mistral serves as a reminder that Microsoft’s AI portfolio extends beyond just GPT.

Microsoft aims to mitigate its reliance on OpenAI

It’s no secret that OpenAI has navigated turbulent waters in recent months. In November 2023, co-founder and CEO Sam Altman faced a sudden removal from his position, only to be reinstated days later. This episode, coupled with ongoing discussions about OpenAI’s internal governance, has raised concerns about the organisation’s long-term stability.

These concerns, alongside the rapid advancement of the LLM landscape, have likely motivated Microsoft to diversify its portfolio. While Microsoft remains a dedicated investor in OpenAI, their partnership with Mistral offers several strategic advantages.

Aside from gaining access to Mistral’s cutting-edge technology to strengthen its own position, the partnership mitigates Microsoft’s dependence on a single LLM provider, offering greater flexibility and adaptability as the landscape evolves. While OpenAI remains a key player, the Mistral collaboration ensures Microsoft is not solely reliant on their progress and future direction. 

This strategic move and continued diversification strengthens Microsoft’s position in the LLM race, ensuring they are well-positioned for the future of AI.