Les Halles used to be the French capital’s belly, hosting the city’s main food market. Today, the market has moved out of town, replaced by a slew of successful tech startups.
Mistral AI, a rival to OpenAI’s ChatGPT, is headquartered at 15 Rue des Halles. Station F, a startup incubator, is located a few blocks away. Founded in 2020, Mistral raised €600 million this month. Under pro-tech President Emmanuel Macron, France gave birth to 25 unicorns, worth €1 billion or more.
But now the French tech sector is worried. If far-right or far-left parties win the upcoming elections, they could reverse Macron’s tech initiatives, tightening immigration rules, tanking the economy with runaway budget deficits, and launching a counterproductive confrontation with Brussels. “For us, the priority is European integration, diversity of talent, and the attractiveness of international financing. Not the return of nationalism, nor the temptation of extremes or inward-looking attitudes,” said Alexandre Labarriere of France Digitale, an independent association of startups.
The risks of a financial meltdown are terrifying. France’s public debt stands at a worrying 110% of GDP and it is running a budget deficit of 5.5%. Both the far right and far left want big spending increases and tax cuts. Something has to give — either a new financially incompetent French government would face a UK-style market-induced meltdown, or it would be forced to junk its spending plans.
An extreme French government could pursue sovereignty, including digital sovereignty, provoking a potential clash with Brussels. Both the far right and far left are Euroskeptics. While the far-right RN no longer talks about leaving the euro, it still does harangue against Brussels and talks about cutting French contributions to the EU.
Tech companies worry about this confrontation. Macron’s pro-tech policies, include tax breaks for startups and his 5 billion “French Tech 120” program provides funding and support for France’s 120 most promising startups. The far right and far left might instead direct these funds to social programs.
Macron’s moves to attract international talent could be junked. The French Tech Visa makes it easier for non-EU nationals to work in France. Marine Le Pen’s RN’s proposed immigration restrictions could deprive startups of needed brainpower. One in five startups uses the French Tech Visa to attract “developers or engineers, coming from India, Morocco, Algeria, Ukraine, Syria, Uzbekistan, the Philippines, or the United States,” says France Digitale’s Labarriere.
A radical government would jeopardize foreign investment, blowing up the success of Macron’s Choose France campaign. Major tech companies, including Amazon, have announced plans to expand their French operations. All told, France landed a record €15 billion in foreign investment last year. In contrast, both the far right and far left emphasize a ‘France First’ that could potentially lead to stricter regulations for foreign investments, limiting funding opportunities for French startups.
Even if the far right or far left fails to secure a majority, tech leaders worry about political instability. It could take months to form a new government and any potential coalition could be unstable. During this period, public contracts could be held in suspense. Pierre-Carl Langlais, co-founder of Pleias, which is building an AI model, depends on public contracts from the Culture Ministry. He fears a post-election slowdown of new public contracts.
Admittedly, Macron’s push for French tech is equaled by his fervor to promote “digital sovereignty.” He imposed a special digital tax on US tech platforms. He fought for Europe to implement its own semiconductor subsidy program. And he supported adding sovereignty requirements in an EU Cloud Certification to limit US cloud providers from bidding on European public contracts. The anti-American bent is clear: Macron has warned against “following” the US.
But in reality, Macron has proved pragmatic. When Mistral AI announced a partnership with Microsoft for cloud services, the president applauded. Google has signed joint ventures with the country’s premier defense contractor Thales.
Once in power, the extremists themselves could moderate. In the campaign runup, Le Pen and her party have tried to normalize themselves. In 2022, they voted in favor of Macron’s cost of living bill. In Italy, far-right Prime Minister Georgia Meloni abandoned her anti-EU narrative after winning the 2022 Italian election and supported NATO against Russia’s invasion of Ukraine. Something similar could happen in France.
The future of France and French tech remains uncertain. Under Macron, a strong foundation has been built for growth and innovation. If forced, Mistral AI could pick up and move across the Atlantic Ocean, following many other promising European startups. Will new rulers really want to throw away this tech success?
Sara Oversteyns is an intern with the CEPA Digital Innovation Initiative.
Bill Echikson is a non-resident Senior Fellow at CEPA and editor of the Bandwidth blog.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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