Is France tech-protectionist? French Ambassador answers.

I had the fortune of having a conversation with French Ambassador to the US Gérard Araud in San Francisco on May 1, alongside two other representatives of the international press. I asked Mr. Araud about his views on the controversy initiated by President Obama in February regarding Europe’s alleged protectionism and anti-US tech policy (for more on that and the initial European reactions, read my earlier post).

The controversy resurfaced a week later, when the European Commission launched its Digital Single Market Strategy on May 6. This strategy is an attempt by European lawmakers to boost the competitiveness of the old continent’s tech industry. It introduces, among other things, the idea of platform regulation – rules that would apply to search engines and social networks. It also addresses the taxation of foreign companies.

American journalists quickly reacted by qualifying the strategy of anti-US. You can read it on Re/Code, the New York Times or the Wall Street Journal.

Questioning whether the actions of countries, like France, struggling to resolve national economic and political crises are motivated by protectionism is legitimate. Especially if such protectionism has severe implications for US tech companies, many of which are based in the very region Mr. Araud was visiting. The question, however, seemed to come as a surprise.

Asked whether he thought President Obama’s concerns were justified, the Ambassador replied that antitrust regulation is in the hands of the European Commission. His answer referred to the investigation concerning Google’s presumed abuse of dominant position opened in April by European Commissioner Margrethe Vestager.

President Obama’s statements, however, came several months before the opening of the Google investigation. So, he could not have possibly referred to it. When reminded that the US President also mentioned privacy and data protection decisions by European authorities, Mr. Araud confirmed that such decisions have indeed been executed by the French national data protection agency, the CNIL. But he also explained that they are based on rules handed down from Brussels and that the CNIL only implements them.

But, do American journalists and concerned companies have a point? Is France tech-protectionist and was Mr. Araud downplaying it? Or is this solely a “Brussels’ attitude”?

Let’s look at recent actions by French Ministers on digital economy questions.

France was caught with its hand in the protectionist cookie jar last April. Economy Minister Emmanuel Macron sent a letter (not public but seen by Decoding Europe), co-signed by his German colleague, to the European Commission about the Digital Single Market Strategy. The letter calls to “regulate essential digital platforms” and asks for “a level playing field on taxation”. Over the past three years, German and French tech and telecoms incumbents have increased their advocacy to their respective governments to introduce both concepts into the European legal framework. The letter also mentions France and Germany’s satisfaction with the Google investigation.

French Culture Minister Fleur Pellerin’s reaction (in French) to the EU Digital Single Market Strategy is also telling. She called the upcoming digital platform probe a way to protect Europe’s “civilizational choices”.

The Statue of Liberty, a symbol of Franco-American friendship, and the Eiffel Tower in Paris

The Statue of Liberty, a symbol of Franco-American friendship, and the Eiffel Tower in Paris (photo: Paris-New York by OliBacCC BY 2.0)

France has long had a love-hate relationship with the US. It has manifested itself recently through a distrust of US companies among the general public. Some politicians turned such a distrust and its protectionist answer into a political platform. The then Economy Minister Arnaud Montebourg prevented the acquisition of French landmark video streaming company Dailymotion by Yahoo in 2013 on those very grounds.

To be fair, tech players are not the only ones in French politicians’ crosshairs. Mr. Montebourg is the self-declared champion of a “Made in France” campaign, which also got him involved in the acquisition of French national champion Alstom by General Electric. The French government initially tried to prevent the acquisition by GE (a US company) at all costs and pushed for a takeover by Siemens (from Germany). The deal is currently being examined by the European Commission.

France would benefit from clarifying its position in the US, given its policy and the way it communicates about it at home. In the last few weeks, other EU leaders have made much less ambiguous statements about the protectionism controversy.

European political leaders with US President and Canadian Prime Minister at 2015 G7 Summit in Germany

European political leaders with US President and Canadian Prime Minister at 2015 G7 Summit in Germany (photo: EU at G7 Summit 2015 by European External Action ServiceCC BY-NC 2.0)

In an April 30 piece in Wired, the EU representative to the US, Ambassador David O’Sullivan, did not beat about the bush and stated clearly that “the notion that there is somehow a EU strategy to drive [US] companies off our shores suffers from a fundamental error of perspective.”

Speaking to a US audience in Washington DC on May 28, EU Commission Vice-President in charge of the Digital Single Market initiative, Andrus Ansip went straight to the point: “With the digital single market, we have been accused of unfairly targeting US tech companies. This is not true.” He added that “[o]ur doors are open, not closed. There is no anti-American agenda and no Fortress Europe, as I continue to read in some media. Accusations of EU protectionism are not only wrong, they are old as well.”

The visit of EU Commissioner for Competition Margrethe Vestager in April right after launching the Google probe is another sign of the European Commission’s willingness to have an open dialogue with its counterparts and industry players on the other side of the Atlantic.

Meanwhile, US tech players don’t seem to mind and continue investing in France. On June 2, Facebook announced the opening of a lab focused on artificial intelligence in Paris, planning to hire twelve people by the end of 2015. And Intel just won the Franco-American Business Award for its investments in France where it employs over 1000 people in seven research and development centers.

Other companies like Salesforce, Microsoft or Google also have a large presence in France, attracted by favorable research and development taxes and a highly-qualified yet relatively inexpensive talent pool.

So, clearly, in spite of the posturing by top French officials, France welcomes US companies and there are actually few concrete cases of protectionism – which probably explains the French Ambassador’s conflicted reply to my questions. France should make sure to communicate this clearly to its key partners across the Atlantic… in so far as French public opinion will allow it!