A Microsoft spokesperson confirmed to CNBC this morning that its multi-year partnership with Mistral AI includes an investment of US$16 million, which would convert into equity in the company’s next funding round. European Union regulators are now looking to examine the deal between the two companies.

“The Commission is looking into agreements that have been concluded between large digital market players and generative AI developers and providers,” a European Commission spokesperson told Euronews Next in an email. “In this context, we have received the mentioned agreement, which we will analyze”.

Speaking at MWC in Barcelona, Microsoft president Brad Smith said that Microsoft would commit to principles aimed at encouraging innovation and competition in AI.

Microsoft first announced the deal on Monday, saying it would make a small investment in the company, but revealed no financial details. The deal, it said, is to help the French AI startup, currently valued at US$2 billion, accelerate the development and deployment of its foundation models.

This is the second AI deal Microsoft has made since pumping US$10 billion into OpenAI in January 2023, for which it is facing heat from EU, U.K. and U.S. regulators for potentially breaching competition rules.

Nonetheless, the deal with Mistral AI could signify Microsoft is moving beyond its reliance on OpenAI and expanding its AI footprint globally.

“It’s important for us to show that this isn’t just about Microsoft technology, it’s not just about American products. This is going to be an engine for technology, innovation and growth in Europe as well,” Smith said.

The two companies, in fact, affirmed that they will also explore collaboration around training purpose-specific models for select customers, including European public sector workloads.

Under the deal, Microsoft will support Mistral AI’s workloads on Azure AI and will make Mistral AI’s flagship models available to customers in the Azure AI Studio and Azure Machine Learning model catalog. This expands the choice of open source models available to Microsoft’s customers.

However, on Monday, the Paris-based company announced a new flagship, Mistral Large, which will be closed source, unlike some of its previous models. According to Mistral, it can be used for complex multilingual reasoning tasks, including text understanding, transformation, and code generation. The model, which Mistral says is the world’s second-ranked model generally available through an API (next to GPT-4), will be available on Azure.

Mistral also released a conversational chatbot, Le Chat, taking on OpenAI’s ChatGPT.