In May, midway through his star-studded tour of world leaders, OpenAI CEO Sam Altman stopped by the Elysée Palace to chat with French President Emmanuel Macron. The pair met inside Macron’s gold-panelled office, an ornate room originally designed in 1861 for the Empress Eugénie and now seared by the addition of monsieur le président’s dark leather furniture and a bleak, impenetrable painting by Pierre Soulages. It’s a room that arguably conjures the vision of France that Macron has often sought to promote: a nation that combines forward-thinking innovation with enduring legacies of imperial grandeur.
French President Emmanuel Macron has worked hard to cultivate a tech-savvy image. He’s a regular attendee of high-profile conferences and is frequently pictured alongside leading industry figures — everyone from Elon Musk and Satya Nadella to a small humanoid robot named Pepper. Now, as evidenced by his recent meeting with Altman, Macron is firmly channelling his long-standing love affair with tech towards AI. In June, at VivaTech Paris, Macron announced a host of new initiatives, including a €500m fund to fund French ‘AI Champions’. “I think we are number one [in AI] in continental Europe, and we have to accelerate,” the French President told CNBC at the event. “We will invest like crazy on training and research.”
Can France fulfil Macron’s dreams? The country certainly has plenty of technical talent, but it’s facing a challenging and costly market. Some, moreover, fear that the EU’s far-reaching regulatory framework might stunt the continent’s innovation, leaving European startups trailing in the dust of the US and China.
France’s ambitions for AI
Macron has always been bullish about emerging technologies. Indeed, his first presidential campaign promised an aggressive agenda to turn France into ‘a start-up nation’ — a slogan that, he said, implied “a nation that works with and for the start-ups, but also a nation that thinks and moves like a start-up.”
Ideally, France wants to foster homegrown companies to compete with the likes of Google and OpenAI. It might have found one in Mistral AI. Founded by ex-Meta and Google AI researchers, the start-up managed to raise €105m in its opening seed funding round in June – Europe’s largest, and all within four weeks of the company’s founding. Its success perhaps betrayed Europe’s growing desire to create a viable alternative to Silicon Valley, and attracted major attention from France’s political leadership, including Macron, who shared the stage with Mistral CEO Arthur Mensch at VivaTech to announce new policies intended to further boost French start-ups.
Can France become a start-up innovation hub? Despite prominent success stories like Citroën and L’Oréal, and boasting a sizeable share of the world’s unicorns, France has long been stereotyped as an overly-bureaucratic and hostile environment for business. Has that changed? Maxime Lhoustau thinks so. “I think we might have an edge,” argues the deeptech analyst at French VC firm Elaia, not least because, under Macron’s ostensibly pro-business leadership, France has embraced an entrepreneurial mindset. Lhoustau is confident that industry-leading startups will emerge from France. “Maybe not on the foundational side, and maybe not a new Amazon or a new Google, but we’ll be able to apply AI to some specific verticals which we’re already good at in France,” he says, pointing to opportunities in fields like sustainability, diagnostics, and drug-discovery.
Nicolas Miailhe, co-founder of AI alignment nonprofit The Future Society, says France has also established a successful framework for getting startups off the ground, especially through government-backed initiatives like La French Tech. What’s more, France also boasts a large talent pool. “We have excellent schools of fundamental and applied research in mathematics, and we have an excellent set of schools of engineering,” says Miailhe. “There’s a reason why DeepMind, Facebook and others have invested so much to build [their] clusters in France.”
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Indeed, in its ‘technical talent’ atlas, VC Sequoia Capital ranks Paris second in Europe for its share of AI talent, at 3.81% (though London hosts a more impressive 12.29%.) But don’t expect a French version of ChatGPT any time soon. “It will be very hard to catch up with the Americans” when it comes to building foundation models, says Mehdi Triki, a project manager at Hub France IA. The large public US models, like GPT-4, were extremely costly to produce and “already have a certain level of maturity – as well as an absolutely phenomenal level of adoption.”
Europe, however, could make a unique mark by targeting businesses, especially those concerned about data protection and legal compliance — issues that ChatGPT has been rather shaky on. “I think the Americans have accelerated well on B2C, but we can differentiate ourselves on B2B,” says Triki. Success, he believes, will be boosted by comprehensive governmental support. “We are at a pivotal moment in France, and I think that the French public authorities have well understood the importance of focusing on AI.”
Regulatory hurdles
EU regulations, however, could dampen Macron’s AI ambitions. On June 14, the EU greenlit its landmark AI Act — the first comprehensive set of regulations for the industry. Although the legislation won’t come into effect before 2026, several major French companies and even some leading figures in Macron’s government are already worried the legislation might starve European innovation.
“The European Parliament’s position seems excessive at a time when we have a pressing obligation to develop generative AI models in Europe over the coming months, in order to be autonomous and not have to depend on non-European models in the years and decades to come,” digital minister Jean-Noël Barrot told Politico.
Macron expressed his own concerns at VivaTech last month. The worst-case scenario, said the French president, would be a Europe that invests less but regulates more than the US and China. Economy minister Bruno Le Maire, also in attendance at VivaTech, was even bolder. “Let’s not start by regulating before investing and innovating. Otherwise we will regulate technologies that will not be ours, which will be American technologies, where we could have French and European technologies.”
Triki, too, says that Hub France IA was concerned about the stifling potential of the EU’s AI Act. They spoke with policymakers prior to the Act’s introduction and came away, says Triki, feeling pretty satisfied. “Our objective,” says Triki, “was to ensure that we did not destroy innovation, or destroy the potential funding that could come to France. It was to ensure that, in the end, there wasn’t any part of the [AI] ecosystem that found itself forced to go abroad.”
Others, however, are more optimistic. The EU AI Act is “a long-term bet,” says Miailhe — one intended to build solid guardrails for foundation models meant to last the test of time. Regulation could help ensure safety and, perhaps most critically, build trust. “Without trust, in the long-run, in the foundations of the [AI] economy, we won’t be able to garner and capture and materialise the economic value,” says Miailhe. He says it’s crucial, however, that regulations are ultimately unified globally, with full compliance in the US. “You don’t want to create a space for forum shopping.”
Regulation isn’t the only challenge. While France has a strong talent base, French start-ups might falter when trying to reach a wider audience, says Cyril Vart, VP at consultancy EY Fabernovel. “So long as successful European companies fail to join forces, we will simply be financially overwhelmed,” says Vart. He compares Mistral AI’s record-breaking €105m funding round to the recent success of Inflection AI — a one-year-old American start-up that last week raised $1.3bn from investors including Microsoft and Nvidia. In Europe, says Vart, “We’ll find it difficult to finance our initiatives with the number of zeros necessary.”
There’s also further challenges when it comes to scaling-up, especially given the relatively small size of the domestic market. “The lack of de facto integration of the EU Digital Market” — an issue that’s compounded by language barriers — “creates an obstacle,” says Miailhe. “For France, to only thrive on its home turf won’t take it very far.” Vart echoes this concern. “We are preparing champions here that the Americans can just buy out,” he says.
It’s not just about the US. France is also facing competition closer to home. The country’s biggest competitors in Europe, says Miailhe, include both the UK — specifically, the London-Oxbridge ecosystem — and Germany. But trying to become Europe’s all-out leader might not ultimately be the best plan, for any of these nations. “We should compete, but we should also collaborate with this revolution,” says Miailhe. “We need to cooperate on challenges that transcend ourselves, and where our values are really at stake.”
European collaboration, Vart agrees, will be essential for fulfilling France’s AI ambitions. With sufficient support, France could win big from hyper-specialised, midsize companies — particularly in the B2B Market. “But going up against Google and Apple?” says Vart. “Let’s be serious.”
