Antitrust Regulator Drops Probe Into Microsoft’s Mistral Deal

The U.K.’s antitrust watchdog has dropped a probe into Microsoft’s investment in French AI startup Mistral.

In February, Microsoft made a $16 million investment in Mistral, which is set to convert into equity during the startup's subsequent funding round.

The Competition Market Authority (CMA) opened an inquiry into the deal to determine if the investment resulted in a “relevant merger situation” – where a company has not been merged outright but certain transactions and arrangements may impact operations.

The CMA found that the investment “does not qualify for investigation” just one day after it launched the merger inquiry.

“In issuing a ‘found not to qualify’ decision the CMA has confirmed that the structure of the partnership between Mistral and Microsoft does not grant sufficient rights/influence to Microsoft to qualify for investigation under the U.K. merger control rules,” said Alex Haffner, a partner at law firm Fladgate. “In so doing, the decision vindicates Microsoft’s stated position on the tie-up.”

The probe was announced in tandem with other CMA investigations into AI vendor partnerships, including Microsoft’s arrangements with Inflection AI and Amazon’s investment in Anthropic. The CMA wants to determine if those partnerships could impact market competition.

Related:Mistral Goes Large: Microsoft Deal, New Flagship Model

The CMA is also conducting a separate probe into Microsoft’s strategic partnership with OpenAI with a focus on changes in the company’s working relationship following last year’s boardroom fallout.

Those probes are still ongoing.

“It is clear that the competition authorities are continuing to engage very closely with developments in the AI sector and we can expect several more announcements by the CMA in the near future as to the outcome of their ongoing workstreams in this space,” Haffner said.

Despite having an investigation into its Mistral deal dropped by U.K. authorities, Microsoft still faces a probe by EU officials. The European Commission is looking into the investment, with a formal investigation holding the potential to sink the deal.

Microsoft also faces a Federal Trade Commission probe into its AI investments. The FTC, which is also examining deals made by rivals Google and Amazon, is looking to ensure market leaders don’t harm competition.