I don't see why Mistral would acquiesce. Like the other comment says, Microsoft has a lot of chips on the table for local AI. They didn't even mention DirectML, ONNX or Microsoft's other local AI frameworks - suffice to say Microsoft does care about on-device AI.

So... would Mistral deliberately sabotage their low-end models to appease Microsoft's cloud demand? I don't think so. Microsoft probably knows that letting Mistral fall behind would devalue their investment. It makes more sense to bolster the small models to increase demand for the larger ones, at least from where I'm standing.