French minister under fire for saying ‘Non’ to Yahoo!
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French Industrial Renewal Minister Arnaud Montebourg’s decision to veto Yahoo!’s purchase of France's popular video-sharing website Dailymotion has sparked claims of interference – and embarrassment – in France.
A decision by France’s Socialist minister for industrial renewal, Arnaud Montebourg, to block Yahoo!’s plans to buy a majority stake in video-sharing website Dailymotion is dominating the front pages in France – and for all the wrong reasons.
Since the Wall Street Journal broke the story, French politicians and businessmen alike have been lining up to pour scorn on Montebourg’s decision, accusing the government of interference despite his protestations that the US firm was seeking to "devour" the popular French video site.
Yahoo! had been negotiating the purchase of a 75 percent stake in Dailymotion, but Montebourg had insisted on a 50-50 division.
Chief Executive Stéphane Richard of France Télécom, which owns 100 percent of Dailymotion, added fuel to the fire by saying the site should make the decision on its acquisition, not the French government. But the government holds a 27 percent stake in France Télécom and the company’s hands were tied.
"I had already rejected Yahoo!’s proposal to take a majority stake in Dailymotion and we were on the verge of coming to a new agreement," Richard told French business daily Les Echos.
"Our priority is to find an ally who can help develop Dailymotion outside Europe," he said. "We had looked at more than 60 potential partners in France and abroad before focusing on Yahoo!. Now we will restart our search."
‘Bad signal to investors’
Montebourg blustered to the circling French press Thursday that he had made his decision in consultation with Finance Minister Pierre Moscovici. Moscovici, however, quickly distanced himself from the commotion by stating that he was “aware of the talks, but not directly involved”.
Smelling blood, former education minister Luc Chatel of the opposition UMP party told France Info radio that Montebourg was “trying to put France at odds with the rest of world”.
“Montebourg is sending a bad signal to international investors,” said Jean-David Chamboredon, president of ISAI, a fund that invests in French start-ups, in an interview with the International Herald Tribune.
But not everyone agrees. Henri Sterdyniak, the head of the economics of globalisation department at the Sciences Po political studies institute in Paris, told FRANCE 24 that the minister’s move was shrewd.
“He simply wants to keep innovative French companies in French hands,” Sterdyniak said.
Another headache for Hollande
Stéphane Distinguin, head of faberNovel, an agency specialising in innovative technology, thinks the story underlines, more than anything, the difficulties in the relationship between the French telecom company and the ministry.
"Though it may not be a national treasure, Dailymotion is still a great model of success for France," he said.The problem now is that we don't know what will happen to them. "What will become of Dailymotion is unclear because we don’t have enough information on what the government’s goal is,” he said.
A campaign to promote France as a good country for investment, “Say Oui to France”, was launched in October 2012 with support from Montebourg. But with Montebourg already the target of corporate complaints that the Socialist government is anti-business, the failure of the Yahoo! purchase was another setback for France.
Amid the latest media storm, it is clear that this is yet another blow to Montebourg’s already fractured public image.
The controversial minister has only just emerged from another undignified row with US industry. The CEO of a US tyre company, who refused to buy a troubled Goodyear factory in northern France, labelled Montebourg “stupid” in February of this year, after the minister called the US tycoon an “extremist”.
With France floundering with a ballooning public deficit and record unemployment, it is clear that this is an economic headache that President François Hollande’s government could do without.