French MPs voice sovereignty, competition concerns after Microsoft-Mistral AI deal

After Mistral AI and Microsoft announced their strategic partnership on Monday (26 February), sparking an outcry from lawmakers in the European Parliament, French MPs have voiced concern over the partnership’s impact on competition and sovereignty in the cloud sector.

Paris-based startup Mistral AI and Microsoft announced that Large, Mistral AI’s AI model and a GPT-4 competitor, will be available on Microsoft cloud’s Azure.

However, the move came under fire amid concerns over outsourcing data storage to companies not based in the EU and fears that the move bolsters the monopolisation of big players in the tech sector.

“France shouldn’t boast and wave the word ‘sovereignty’ left and right. The government completely lacks coherence,” centrist Senator Catherine Morin-Desailly told Euractiv.

“We continue to rely on non-European actors even though the data transfer agreement with the US still doesn’t protect us against extraterritorial laws. France doesn’t defend its clouders at all,” she said.

Sovereignty

French lawmakers have long been concerned over the extraterritoriality of the US Foreign Intelligence Law (FISA) and Cloud Act. Under these laws, US security agencies can compel US companies or citizens to share sensitive foreign data.

In an attempt to safeguard itself from these vulnerabilities, France created the SecNumCloud certification, developed by the national security agency ANSSI, and put in place its “cloud-to-the-center” doctrine which demands that public sensitive data be stored on SecNumCloud-certified clouds.

According to centre-right MP Anne Le Hénanff, who was rapporteur for cloud articles on the French umbrella digital bill SREN, Mistral AI’s use of Microsoft’s cloud is not an issue as long as no sensitive data is shared on Azure.

However, she considers that when it comes to sensitive data, using Large will have to respect the “cloud-to-the-center” doctrine and refrain from using non-sovereign clouds.

She noted that Mistral AI had said it was willing to work with OVHcloud, a French cloud provider which has been granted the highest SecNumCloud certifications.

A source close to current digital secretary of state Marina Ferrari told Euractiv that Mistral AI is set to deploy AI models on other French cloud providers too, such as Scaleway or Outscale.

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Competition

Several MPs have also queried the partnership’s impact on competition.

“In my opinion, the French position is to encourage and support European innovation while preventing historical monopolies from recurring,” Mireille Clapot, a Renaissance MP head of the National Assembly’s High Commission for Digital and Posts, told Euractiv.

In the same spirit, Le Hénanff said she will be wary about “Microsoft’s harmful practices which have been highlighted by the French competition authority,” quoting self-preference and user lock-in practices on Azure’s cloud offer.

“Microsoft has implemented over the past 25 years a number of very harmful practices in the cloud sector in key areas,” she said, adding that it was notably the case for Microsoft collaborative tools.

The French competition authority decided in early February that it would look into competitive practices of digital companies in the AI and cloud sectors, as well as Big Tech investments into AI startups. An opinion is expected in the coming months.

In addition, a European Commission spokesperson confirmed on Tuesday (27 February) that the EU executive had received notice of the partnership, which involves a €15 million investment by Microsoft in Mistral AI, and will look into the agreement.

Furthermore a Mistral AI spokesperson said to Euractiv that the company’s objective was to develop a technology tailored to corporate needs, hence using Microsoft’s cloud, while making generative AI accessible to the masses and therefore remaining “deeply attached to the open source model.”

Éric Bothorel, a Renaissance MP, told Euractiv that one should not rush to conclusions, as this distribution partnership is a mere way for Mistral AI to grow.

Moreover, he considers Microsoft’s investment to be “a marginal contribution compared to the €500 million” fundraised by the startup since its creation in April 2023.

Microsoft’s investment in Mistral AI does not yet amount to a stake in the company, but could be converted into equity in Mistral’s next funding round.

Economy Minister Bruno Le Maire congratulated Mistral AI in a post on X on Tuesday (27 February), concluding that: “France has the means to be one of the great nations [developing] artificial intelligence in Europe and in the world”.

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[Edited by Nathalie Weatherald/Zoran Radosavljevic]

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