Central to France’s arguments was that the EU AI Act in its earliest form could stifle innovation, forcing European companies to look for foreign investment.

“It’s just another example of this general trend that we’ve seen in AI, where essentially all the kind of smaller independent startups are signing deals with the Big Tech companies, primarily because of all the concentration that you have when it comes to computing power, especially cloud computing,” said Max von Thun, Europe director of the non-profit Open Markets Institute.

“And if you want to develop a cutting-edge AI model, you basically need access to that,” he added.

Von Thun said the partnership is “ironic and concerning” as what makes Mistral’s case more interesting is that the company is “supposedly Europe’s best hope when it comes to AI”.

The EU has made a push to level the playing field when it comes to its technology companies, creating regulations such as the Digital Services Act.

But the issue of keeping Europe’s tech talent is largely down to funding and not the rules and regulations, because Europe cannot compete with the venture capital scene in the US or the Big Tech giants.

“You can do what you want in regulation, but what really determines whether you have companies that can compete and succeed at the European level is whether you have companies that have the infrastructure and the investment that they need at the European level,” said von Thun.

“And that’s not the case right now”.

Mistral’s deal with Microsoft is not a merger, which is probably intentional, von Thun said.

“If you try and buy someone outright, it’s going to be really difficult. Whereas, these partnerships are a lot more nebulous,” he said, explaining that it is a way for Microsoft to still compete with Mistral while avoiding antitrust scrutiny through these deals.

Despite Microsoft announcing on Monday it is opening access to its AI models for programmers to develop them, von Thun argues it is unlikely Microsoft is allowing open source models for the greater good or fairer competition.

“If you open up these models, you allow different people to experiment with them. But I think when it’s on the Big Tech platform’s terms that raises questions about what the access looks like.

“Can you trust these companies to maintain their open access over time if that company actually starts to lead and challenge them?

“I would say no”.