These stories about regulation preventing EU frontier models are frankly complete bullshit. The real reason is much simpler, but also harder to fix.

To build frontier models you need VC money. There’s no VC money because VC believe that there is no market for a ‘EU Champion’.

There’s no market for a EU champion because internal EU market is not big enough for VC returns. Why invest in EU champion when the US champion is guaranteed to have better returns ?

And there’s no public alternative to VC either because that’s national level and national investment in EU doesnt cross national boundaries

Mistral actions reflect this, they need returns and they target the market where they can be competitive, which is the scraps the US labs cannot address. This is not enough to fund frontier lab research

Also the legal context on regulations is quite different from the US. In the US you can have unlimited damage, that is not the case in the EU, where regulation penalty can never as a matter of principle put the existence of the company in danger, and thus the application of the regulations is always a matter of negociation with the government. You don't have to respect everything all at once, size of the company and ability to actually implement the regulations are taken into account, which means that sartups are usually excempt.