• The U.K.'s Competition and Markets Authority cleared Microsoft's AI partnership with Mistral of regulatory concerns after previously inviting views on whether the arrangement qualified as a merger.
• Under the terms of the deal, the U.S. tech giant receives a minority stake in Mistral, while the French company adds its large language models to the U.S. tech giant's Azure cloud computing platform.

The U.K.'s Competition and Markets Authority cleared Microsoft's artificial intelligence partnership with Mistral of regulatory concerns after previously inviting views on whether the arrangement qualified as a merger.

The CMA said in a brief update Friday that the deal "does not qualify for investigation under the merger provisions of the Enterprise Act 2002."

A CMA spokesperson said the regulator found that, based on evidence provided by Microsoft and Mistral and additional industry feedback, it does not believe Microsoft has "material influence" over Mistral.

"Investment and partnership are essential to new players in the AI economy," A Microsoft spokesperson told CNBC in an emailed statement. "We welcome the CMA's determination that our fractional investment and partnership with Mistral AI does not qualify as a merger or acquisition."

Mistral was not immediately available for comment when contacted by CNBC.

Mistral, a French AI firm founded in 2023, won a 15 million euro, or $16 million, investment from Microsoft earlier this year.

Under the terms of the deal, the U.S. tech giant receives a minority stake in Mistral, while the French company adds its large language models to the U.S. tech giant's Azure cloud computing platform.

The CMA has been seeking views from interested parties on partnerships agreed by U.S. tech giants with smaller AI firms to determine whether arrangements between the companies qualify as mergers.

As part of this effort, the CMA looked into whether minority investment deals agreed by Microsoft and ChatGPT maker OpenAI and Mistral, as well as Microsoft's hiring of certain former employees from AI startup Inflection, constitute mergers.

The watchdog separately invited comment on an arrangement between Amazon and AI firm Anthropic.

Now, the regulator says it is no longer looking into Microsoft's investment in Mistral.

It has given no update on its inquiries into the Amazon-Inflection deal or Microsoft's OpenAI deal and hiring of ex-employees from Inflection.

Microsoft previously denied that its deals with OpenAI and Mistral — plus the hiring of employees from Inflection — constituted mergers.

Amazon has also said that its partnership with Anthropic represents a limited corporate investment, not a merger.

Alex Haffner, a competition partner at Fladgate, said that the fact the CMA only confirmed the conclusions of its Mistral investigation "leaves open the position on the other two deals, as well as the CMA's ongoing investigation into Microsoft's role in the OpenAI project."

"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 stated via email.