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Macron government’s extension of rules to block acquisitions sends chills through French Tech

One of the most controversial events in the rise of the French Tech scene was a move by the previous government to block the sale of streaming site Dailymotion to Yahoo. In 2013, then Economic Minsiter Arnaud Montebourg, declared: “I am not going to allow the sale of one of the best startups of France!”

Yahoo dropped the offer. And Dailymotion has since struggled to remain relevant and raise the money it needed to be competitive. To be fair, part of their objection was the weakness of Yahoo, which itself continued to stumble along and was eventually sold to Verizon.

Still, for French entrepreneurs and venture capitalists, it was a searing moment, a feeling that maybe the government didn’t understand the realities of the global market, or the need to encourage exits that would deliver returns for investors.

But Montebourg was replaced the following year as economic minister when the government sought to embrace a more moderate, pro-business posture. He was replaced by a young, upstart named Emmanuel Macron. A few months later, Macron was interviewed on stage at the Le Web conference where sought to distance himself from the protectionist policies of his predecessor.

“My role is not to protect existing businesses, nor existing jobs, my role is to protect people, and to help them take risks,” Macron said.We must allow “the emergence of a real technology market.If we want a real outcome for these companies and start-ups in search of growth, we need a real tech market.”

Macron, of course, was elected president last year on the heels of an insurgent campaign that leveraged the enthusiasm around his unabashed support for La French Tech. And entrepreneurs cheered a new day.

Which made a pronouncement today by Macron’s prime minister Édouard Philippe. Essentially, the government is extending a general decree issued by Montebourg about the state’s desire to protect certain crucial industries from acquisition. And it is expanding its definition of what those industries to include digital data storage, artificial intelligence, and nanotechnologies, aerospace and and financial infrastructures.

That decree required the approval of the French government for some acquisitions by foreign companies. But it may now give the government the option to create special shares that allows the government to exercise certain controls over IP. And the government may creates funds to invest in companies that help it block takeover bids.

The announcement brought a swift response from France Digitale, an advocacy group that represents startups and venture capitalists in France. The warning to tread carefully marked a rare split between the Macron government and the digital sector it seeks to champion.

In a statement, France Digital officials wrote:

“France Digitale shares the will of the Prime Minister to see growing in Europe digital champions, but invites him to avoid a new ‘Dailymotion affair,’ which would permanently hurt the attractiveness of our startups.”

The group emphasized the growing foreign investment that is flowing into French startups, and warned that any efforts to block or control exits could chill that interest:

“International investors based in London, Berlin, New York and even Moscow have rediscovered France…A protectionist surge would totally counter this dynamic. Similarly, acquisitions of technology companies by international players have the dual benefit of enabling the recycling of value creation in the tech ecosystem and, in a post-Brexit vision, to promote the establishment in France of head offices by these international buyers.”

The letter was co-signed by Jean-David Chamboredon, Co-President of France Digitale; Rachel Delacour, founder of Bime Analytics and Co-President of France Digitale; and Fleur Pellerin, member of the Board of France Digitale, former Minister of the Digital Economy.