[aurareturn]

In my opinion, being "Not American" or "Not Chinese" is not a good business model long-term.

At some point, businesses will choose the option that provides the most value. I'm very skeptical that Mistral will survive long-term.

Edit: I hear the commenters to this post. However, Mistral still relies on American chips. If there is truly a divorce between Europe and the US such that relying OpenAI or Anthropic is not an option, neither will relying on Nvidia and likely the thousands of smaller hardware and software suppliers that make Mistral work. That's why I don't think it's realistic to say that Europeans can't rely on OpenAI/Anthropic and that Mistral is free from American reliance. If you want true independence, you have to rebuild every single layer like what China is doing. That's hard and expensive.

[ben_w]

> Edit: I hear the commenters to this post. However, Mistral still relies on American chips. If there is truly a divorce between Europe and the US such that relying OpenAI or Anthropic is not an option, neither will relying on Nvidia and likely the thousands of smaller hardware and software suppliers that make Mistral work. That's why I don't think it's realistic to say that Europeans can't rely on OpenAI/Anthropic and that Mistral is free from American reliance. If you want true independence, you have to rebuild every single layer like what China is doing. That's hard and expensive.

American designed. The GPUs are made in Taiwan, the RAM in South Korea, using machines from the Netherlands' ASML.

True independence is indeed hard and expensive. But it's also not the job of Mistral to tackle all the layers at the same time, not even the state-owned corporations of western Europe in the 20th century (and the EU isn't (yet) even a state) tried to tackle every stage of an industrial process by themselves.

[aurareturn]

American designed and controlled by the US government. See China export ban.

[ben_w]

Indeed. But that US government control is limited to adding restrictions and removing them again, or offering money, it can't magic things out of the air when other people or nations put restrictions on them. And that's even absent Trump being an idiot who had to be talked out of killing the goose while it was laying golden eggs: https://finance.yahoo.com/news/trump-considered-breaking-nvi...

For example, if China looks at the chaos that has been Russia attempting to take Ukraine and the USA attempting to control Iran and thinks "Amateurs" right before doing the same to Taiwan, the GPU supply takes a massive dive. And if North Korea goes after South Korea, RAM gets even harder to buy.

And if the EU says no more ASML sales outside the EU, that delays factories outside the EU by a few more years than they'd otherwise take.

But in the other direction, if NVIDIA's only thing is IP, and the IP is tied to a nation which thinks everyone else on the planet is hostile, that IP may not get protected very well. Right now this is unthinkable, but 5 months ago so was Trump threatening force to take Greenland.

[aurareturn]

I’m arguing that there can’t be a separation. You said ASML and restrict exports to US fabs but ASML rely on American suppliers like Cymer for the laser.

[ben_w]

A separation of what? Reads like you mean "Europe and the US"?

For stuff like these examples, oh yes it can separate. It would be painful to replace, but even supply chain destruction (i.e. even if substitution isn't ready to replace the severed connections) is absolutely a possibility - to think otherwise is the mistake Russia made about its supply of fuel to the EU allowing it to take Ukraine without consequence.

Right now, the EU is looking at Trump and thinking he's arrogant enough to try military action against us. Canada and Mexico are hopefully making similar plans.

But even without Trump, we can't trust China not to call Taiwan's bluff on using TSMC as a hostage against being invaded, nor against the North/South Korean conflict resuming.

[aurareturn]

You can't separate such that you can't rely on OpenAI and Anthropic but you can rely on Nvidia, chips, and other software and hardware that make AI work.

[rsynnott]

Particularly if you’re in a regulated industry, “not American” and “not Chinese” _do_ provide value; they reduce risk.

In particular, the framework under which European companies can transfer data to US companies at all is beyond fragile.

[nairboon]

Recent political events have demonstrated that "Not American" is a very valuable strategic attribute.

[CGMthrowaway]

For Mideastern countries, it is paying off. For European countries, remains to be seen

[lenerdenator]

I can't think of a place on Earth less blessed by "not American" than the Middle East.

[CGMthrowaway]

That all depends on your perspective

[lenerdenator]

The "has worked very hard to make sure the US has a strategic interest in the region with regard to fossil fuels" perspective. The Saudis, in particular, have made it clear that if they don't get better deals than the average middle power does from the US, that it'd be very hard on the US economy because of their control over oil. There's a reason that you see so much in the way of defense and energy investment in the Kingdom, despite the almost diametrically-opposed cultures.

There's also Israel but that's getting into a whole thing that I don't want to sh*t the thread up with.

[CGMthrowaway]

There is a decision leaders must make whether they want to play nice with the US, and accept the chains of servitude; or whether they want to fight (literally) for independence. The latter is not easy, but some have done it.

[Lalabadie]

> If there is truly a divorce between Europe and the US such that relying OpenAI or Anthropic is not an option, neither will relying on Nvidia and likely the thousands of smaller hardware and software suppliers that make Mistral work.

Well, you're pointing out a dissonance in a common AI (stock) booster argument: What if the hardware has lasting power?

If it does, then a company like Mistral can buy their capacity once from Nvidia (as in, once for each unit of capacity), then use it for a sustainable amount of time. No one forces them to scale beyond what's useful to the company and a mature user base. Provider dependence fades over time. That's a problem with Nvidia's current valuation.

If hardware doesn't last over that time, then the amount of cash invested in data center hardware can't really be reconciled with the expected revenue of running them at scale, and these projects are bound to run at a deficit over too long for them to be sustainable. That's a problem with Nvidia's valuation.

With independence as a target, Mistral can pretty safely bet on the former scenario, and then prepare for a future with either a mature market of diversified hardware providers, or innovations in quality and capacity for hardware they already have.

[johngossman]

Businesses are risk averse and in the current environment they are all looking to secure their supply chains, whether to reduce their dependence on silicon from Taiwan, oil from the strait of Hormuz, or digital services from the United States. I think you are also underestimating the power of regulation. Not all European businesses have to be all-in for Mistral (or another alternative) to survive. This is one reason so many countries still have domestic defense, aerospace, and even automobile companies.

[goodluckchuck]

This phrasing disregards the value of those traits. For example there are very clean and nice public restrooms at my local park, they may be objectively better products and I use them sometimes, but I usually use the one in my house.

[vidarh]

Unless/until there is a risk that the chips themselves are backdoored and trying to exfiltrate data, European companies that host in Europe still solve a big problem for use of certain data in Europe.

It's not a purity test. Relying on US chips in not the same deal-breaker for all but the most extreme situation as relying on a poorly regulated US company to run the inference.

[dd8601fn]

Out of curiosity, how does a chip that does inference calculations exfiltrate data without being seen?

Has this happened already or is it just conceptually possible?

[vidarh]

Not to my knowledge, and that's the point.

Though cards could if a provider has poor opsec. But I see no particular reason to worry about that either.

[snek_case]

Sure, but it's probably not that easy to exfiltrate multi-terabyte datasets without being detected.

[vidarh]

That's kinda the point. It's a far more remote threat.

[jeroenhd]

AI companies will find other ways to make money before global geopolitics find a new status quo. For the coming years, it seems like a perfectly fine business model.

China isn't going to be friendly any time soon and so far America seems to be getting more in rather than less hostile. It wasn't that long ago that an American-Danish war was a realistic scenario.

[nairboon]

> ... an American-Danish war was a realistic scenario.

Was a scenario? Isn't it still a possible scenario? As far as I know, the President of the United States has never formally recognized and apologized for this blatant violation of the UN Charter Art. 2.4. For all we know, in the absence of this realization, the US is still plotting to violate the territorial integrity of Denmark.

[jeroenhd]

He's been distracted by another war in the Middle East and a quick regime overthrow in Venezuela for now. It looks like Iran is going to keep him occupied for a while.

If the Americans who disagree with Trump are indeed the majority like they claim, this distraction only needs to last until the midterms.

[j16sdiz]

It is not a good business model _long-term_.

but, if you are lucky, you can but enough time to become competitive in that sector.

[kakacik]

Swiss & Monaco regulated industries can't use US models, nor clouds legally. Not just banking, there is a large part of business data holding identifiers that can't cross borders, military can't be too dependent on foreign hostile powers. If they would be purchasing, they would go for such tailored solution. Things like that add up.

Some of the use may be legal requirement, some is sponsored (as I would expect French government to do, to some extent EU), some are simply moral moves from >95% of the mankind not living in US who watch the news at least a bit. US isn't that big in many regards and its actively harming its reputation daily to the point there is little left.

[samultio]

If the EU can't rely on Nvidia everything must have broken down already, no advanced semiconductor today could be produced by one country only. Unless there's some alternative to ASML and Zeiss the EU is part of that chain.

[aurareturn]

That's right. So if everything is already broken down, so will Mistral.

That's why this talk of independence is unrealistic.

[wongarsu]

Never let the perfect be the enemy of the good. And if I'm processing personal data, the threat profile of sending that to a US-based company for inference is very different than the threat profile of sending that data to the EU to run on American chips. One is almost certain to end up in the hands of US government agencies and has a low but real probability to end up in training data or a data breach. The other is has much less immediate threats to my data

[ben_w]

> That's why this talk of independence is unrealistic.

No, just really hard. Tackling one problem and thinking it done is the same error as taking one step and thinking you've climbed Mount Everest; the converse is the same, just as one cannot climb Mount Everest without the first step, one also cannot become independent without making the first independent replacement for one the links in the chain you rely on.

[psychoslave]

>At some point, businesses will choose the option that provides the most value.

There is no absolute "most value" though. What’s true in a world were betting on the least worst horse like world empire of the day doesn’t necessarily fit when it global order accelerate transition to multipolar geopolitics boosted on nationalist steroids.

[maxglute]

Well on paper ASML leverage = EU has access to western semi tech stack. It would be interesting to see Europe successfully strong arm leading edge fabs in EU (not for lack of trying) exchange for ASML access... but Netherland has independent pro US foreign policy.

[nova22033]

In my opinion, being "Not American" or "Not Chinese" is not a good business model long-term.

Exactly..

What happens when the capability of American models far exceeds the capability of non-American models? Wouldn't companies using American models have a huge advantage?

[aurareturn]

Yep. This. That's why I don't think it's a viable business model.

Also, OpenAI and Anthropic will just open EU offices and subsidiaries.

[hsuduebc2]

American chips depend on European-made Extreme Ultraviolet lithography machines, which are among the most complex machines ever built and rely on European high-tech mirrors, etc... Everything is then assembled in Taiwan. This industry is so interconnected that nothing can be done independently, at least not in the Western part of the world.

The main point should not be the hardware or software itself, because these are just tools that can eventually be obtained. The real issue is development and its cost. US companies now have to cover substantial capital requirements for developing entirely new business models, capital that would likely never be accumulated in Europe. In the past, they competed globally, but in a more fragmented world this is no longer the case. As a result, the risk associated with such investments is higher because potential reward is smaller.

Mistral does not have to compete in the same way. It lacks both the ability and the intention to fight on the global stage against Silicon Valley capital. Instead, it can wait for the industry to stabilize and for business models to mature, then adopt them.

Over time, there will be standardized ways to train models to a certain quality, and key technologies will become less opaque. This is already happening. A similar pattern occurred in Europe with hosting services, for example Hetzner.

Mistral is not playing the same game. It is also unlikely that US attitudes toward Europe will change significantly even with a different administration, that Russia will stop trying to undermine the EU, or that China will become a fair and friendly player. All of this supports the case for local providers of critical infrastructure, which benefits companies like Mistral or similar European counterparts.

[adev_]

> At some point, businesses will choose the option that provides the most value. I'm very skeptical that Mistral will survive long-term.

This is a pretty naive and innocent take. There is good reasons to why customers might continue to find value in Mistral A.I.

(1) - There is no particular reason why "European" model should be worst than "Chinese" one. GDPR restrictions are not such a big deal and have been made lighter recently [1]. And contrary to China, Europe is not under hardware embargo.

(2) - Most domains are not software engineering and do not need ultra advanced and extremely large models with complex agent setup to reach their optimum in term of A.I usage.

(3) - At the opposite, there is pretty good reasons why companies would want to use European operators with the current geopolitical context (e.g Cloud Act, Risk of data leaks, Regulations, Taxes, Reputation, Geo-political risk, ...).

[1]: https://digital-strategy.ec.europa.eu/en/faqs/digital-packag...

[Tade0]

It is a good business model when the differentiator is that your company doesn't have just two modes:

1. Starting shit.

2. Thinking about starting shit.

At least in the EU people are willing to pay more for fewer features so long as the two mentioned points are not the entire strategy.

[lenerdenator]

It's also naïve.

This is the same Europe that is gladly mandating age verification for citizens accessing online services, and that is made up of countries that routinely censor speech. There's also a variety of values that make up pan-European politics, both from a national and ideological perspective, that could make these efforts fracture.

If the idea is to not be subject to foreign pressure, maybe there's a short-term argument to be made for this, but like you say, they'll still be vulnerable to hardware imports, which is arguably the main vulnerability.

If the idea is to protect human rights on the continent, this does nothing.