France Loves Tech, but Not Amazon, or Uber, or Google, or ...
If you had to summarize France's official position on technological change, it would go like this: Progress is great and we love it -- just so long as it isn't too disruptive.
Francois Hollande , the French president, probably won't put it quite so bluntly when he meets with Internet industry leaders in San Francisco today, at the end of his state visit to the U.S. But over the past few weeks, his administration has been broadcasting this mixed message at an increasingly loud volume.
On one side is Fleur Pellerin, the government minister charged with innovation, who in November began an initiative called "La French Tech." Its self-stated goal: "to do everything so that the next Google will be born and developed here, in France and in Europe." She plans to spend about $300 million to help French startups promote themselves and grow, and she has been traveling around Europe and the U.S. spreading the message that technological innovation is welcome.
On the other side are some of her colleagues in the socialist government, who have taken aim at technology companies (particularly foreign ones), including Google Inc. , Amazon.com Inc. and Uber Technologies Inc.
At the urging of Minister of Culture Aurelie Filippetti, the French Senate last month unanimously passed a law that prevents Amazon from offering free shipping, which is viewed as a threat to the nation's independent bookstores.
In December, the interior minister and the minister for tourism imposed a restriction on online private-car hiring services including Uber, that compelled drivers to wait 15 minutes between receiving a booking and picking up their clients. The purpose was to give a competitive edge to licensed taxi operators, which have lobbied strongly against the high-technology newcomers. The online companies complained to the nation's highest administrative court, the Conseil d'Etat, which overturned the 15-minute rule this month. Taxi drivers immediately started a series of strikes, and earlier this week the government announced it would appoint an official mediator to try to end the dispute.
Then there's Google, which has been in a protracted tussle with the French agency overseeing data privacy, the Commission Nationale de l'Informatique et des Libertes. In January, the CNIL fined Google more than $200,000 for not complying with data protection laws.
This complicated straddle was perhaps best summed up by Industry Minister Arnaud Montebourg , at a technology conference in Paris in December. When it comes to innovation that can destroy existing companies, "well, we have to go slowly," he said in remarks that were posted online.
To anybody familiar with the work on disruptive innovation of Harvard Business School professor Clayton M. Christensen and others, this attitude is a nonstarter, and many of the venture capitalists and web entrepreneurs in the audience were taken aback by Montebourg's comments. "There's no such thing as a little bit of disruption," says Liam Boogar, a Silicon Valley transplant who co-founded Rude Baguette, a Paris-based blog that tracks developments in the French technology scene.
Yet from a French perspective, such talk seems unsurprising. The government has long devoted substantial energy and financial resources to keep ailing industries going. At the same time, the French state has long occupied a central role in innovation. One of Hollande's principal initiatives in technology has been to create a public investment bank, the Banque Publique d'Investissement, which has a mandate to invest more than $16 billion in innovative startups and other enterprises by 2017, when the next presidential election will be held.
It isn't obvious to anyone who isn't French why the government is best placed to foster such innovation. Moreover, some of the most promising startups aren't sticking around waiting to be showered with taxpayers' money. One of the most successful, an online ad platform software company called Criteo, raised more than $250 million last October in an initial public offering on Nasdaq.
As for Hollande's trip to San Francisco, the decision by Montebourg last May to block an attempt by Yahoo! Inc. to buy the French YouTube competitor DailyMotion, may still stick in people's memories. Mark Bivens, a U.S. venture capitalist in Paris, says that this sort of incident just gives U.S. technology companies "one additional simplifying data point that allows them to dismiss the French market as complicated."
That's a tough judgment. France still produces excellent engineers and mathematicians, and has the brainpower to create great startups. After all, it was in France that the Minitel, the precursor to the Internet, was invented. The French are also world leaders in high-speed trains and were pioneers of nuclear power. There have been some notable white elephants, too, including the aesthetically beautiful, but financially ruinous, Concorde supersonic airplane. While French-style state-sponsorship can work for large-scale plans, it has so far been much less successful at fostering the sort of innovative products and services that do well in the 21st century, the ones invented by people in their garages and then taken to world scale. France still needs to find a way to marry its traditional top-down abilities to a modern nonstate entrepreneurial culture.
Attitudes are also beginning to change. Pellerin, the innovation minister, announced last month that she wants to set about trying to alter the French mindset about failure. It can take as much as eight years for an entrepreneur in France to rehabilitate him or herself after a bankruptcy, the longest in the European Union. And unlike in Silicon Valley, where failure is seen as useful and even necessary for future success, in France it comes with a social stigma. Pellerin is hoping to get a debate going that would change that.
All these are steps in the right direction. But France needs first to overcome its ambivalence about disruption and embrace change if it is to truly produce its own Google-like successes. Living in the past is charming and brings in the tourists, but doesn't guarantee future prosperity in a world that is changing at the speed of the fastest algorithms.
(Peter Gumbel, a Paris-based journalist, is the author, most recently, of "France's Got Talent: The Woeful Consequences of French Elitism.")
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