French AI Ambitions at a Crossroads: Election Uncertainty Shakes the Nation’s Tech Utopia

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Morgan Meaker

French AI Ventures Were Riding High Until Political Changes

For years, French leader Emmanuel Macron has openly expressed his ambition to cultivate a national titan in artificial intelligence. In a 2018 conversation with WIRED, he emphasized his desire to play a significant role in the impending AI revolution. Following that discussion, he vigorously pursued his vision of transforming France into a hub for innovative startups capable of standing toe-to-toe with American and Chinese giants. However, in April 2023, Arthur Mensch, an entrepreneur known for his distinctive eyebrows, emerged as a beacon of hope for Macron’s dream with the debut of his company, Mistral AI.

The introduction of Mistral's AI counterpart to ChatGPT, named Le Chat, in February 2024 was met with tremendous anticipation. It wasn't long before parallels were drawn between Mistral's CEO, Mensch, and his counterpart in San Francisco, Sam Altman, with both being in their thirties and leading companies that were supported by Microsoft. Mensch, like Altman, managed to secure significant funding, and although Mistral's valuation of $6 billion was dwarfed by OpenAI's staggering $80 billion, it was still seen as a significant achievement. For President Macron, Mistral represented a testament to French innovation, leading him to herald France as a future AI powerhouse.

This positive outlook spread rapidly. According to a report by venture capital firm Accel in June, French AI startups specializing in generative technologies have secured $2.3 billion in investments in the last ten years, surpassing the funding acquired by their counterparts across Europe. Within the entrepreneurial community of Paris, there was a prevailing belief that France's AI sector was on an unstoppable trajectory.

When Macron unexpectedly announced a sudden election earlier this month, the AI sector soon started to worry that the advancements made over the last seven years might be jeopardized due to election promises that could potentially disrupt their talent supply and significantly increase taxes.

This Sunday, citizens of France will participate in the initial round of voting. Surveys indicate a contest between a far-right group opposing immigration and a coalition that includes a hard-left faction against capitalism, while Macron's centrist coalition is currently lagging behind in third place.

"Considering the top two choices in the surveys, we might face a significant regression, which is both alarming and discouraging," remarks Roxanne Varza, the head of Station F, the startup hub in Paris initiated by the billionaire and supporter of Macron, Xavier Niel. "We're attempting to ignore it, yet it's a constant topic among us, and the conversation inevitably centers around deciding on the lesser evil, regrettably."

Currently, the French artificial intelligence sector, along with its notable domestic enterprises and charitable organizations, including Mistral, Kyutai, Hugging Face, and H, is encountering a period of uncertainty. The previously favorable environment that significantly propelled the sector forward is now being challenged by a large segment of the electorate. Polls indicate that these voters are gravitating towards political parties that advocate for the reintroduction of wealth taxes (supported by both the far-right and left), the imposition of taxes on "super-profits" (endorsed by the left), and the tightening of immigration policies (favored by the right). As a result, a sense of pessimism has enveloped the sector, and the nation, which once harbored aspirations of becoming the AI hub of Europe, is now preoccupied with discussions on how to navigate through these challenging times.

Varza views Marine Le Pen’s National Rally, with its far-right stance, as a significant danger to the level of immigration necessary for the industry to remain competitive on a global scale. At the immense Station F tech hub, home to around 1,000 startups, the community is diverse, consisting of individuals from 65 different countries. Many have relocated to Paris through Macron’s French Tech Visa scheme, designed to facilitate non-European startup entrepreneurs, investors, and employees in moving to France along with their families. To streamline the application procedure for these founders, the government has even established its own dedicated office on the Station F premises.

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"Varza also highlights that, on the opposite end of the spectrum, [the left-wing New Popular Front] has been outspoken regarding their intention to reintroduce various tax policies, suggesting a regression to the era before Macron's leadership. She references the 2012 'les pigeons' movement in France, where frustrated online business founders protested against the Socialist president François Hollande's proposal to significantly increase taxes for entrepreneurs."

Maya Noël, the head of France Digitale, a group representing startups, is concerned about France's capability to draw in talent from abroad and its attractiveness to foreign investors under future administrations. Google disclosed plans in February to establish a new AI center in Paris, staffing it with 300 specialists. Following this, three months later, Microsoft declared an unprecedented commitment of $4 billion to enhance its AI operations in France. Since 2015, Meta has operated an AI research facility in Paris. Noël believes that currently, France holds significant appeal for international investors, emphasizing their importance. Requests for comments from Google and Meta went unanswered by WIRED, while Microsoft chose not to respond.

The upcoming ballot won't directly affect Macron's presidency, as the next presidential vote isn't due until 2027. However, the results could significantly alter the composition of France's National Assembly, potentially leading to the appointment of a prime minister aligned with the far-right or left-wing factions. Such an outcome could throw the government into a state of unpredictability and increase the likelihood of legislative stalemate. Over the last six decades, there have been merely three instances where a French president had to manage the country alongside a prime minister from a rival political party, a situation referred to as "cohabitation" in France.

Under Macron's leadership, no AI enterprise has seen more success than Mistral, which was co-founded by Cédric O, a key digital minister in Macron's cabinet. Mistral has remained silent on its stance regarding the upcoming elections in France. The company indirectly hinted at its political leanings when Cédric O reshared an X post by the entrepreneur Gilles Babinet, which criticized both the far-right and the left's economic policies as being unrealistic. However, when approached by WIRED for comments on the shared post, Mistral clarified that Cédric O does not represent the company's official views and opted not to provide further insights.

Babinet, who serves on the government's artificial intelligence panel, mentions that he's aware of fellow members contemplating exiting France. "Some developers I'm acquainted with from Senegal and Morocco are already plotting their departure," he notes, adding that individuals have sought his assistance for early visa renewals, fearing future complications should a far-right administration come into power.

In response to reports that various sectors are discreetly throwing their weight behind extreme right-wing groups as a more favorable option than the leftist coalition, Babinet minimizes the potential danger posed by the New Popular Front. He suggests that the Front's approach is outdated, particularly in their grasp of modern economic principles. "Their economic policies are from a bygone era, showing a lack of understanding of today's economy," he remarks. However, after engaging with members of the New Popular Front, Babinet has observed that the radical leftists represent only a fraction of the group. "The majority are Social Democrats who have learned through experience. For instance, when François Hollande assumed presidency and attempted to hike taxes on tech sectors, the move was a spectacular failure."

There's a palpable effort to mitigate concerns, with the sector aiming to calm fears by insisting that all is well. Babinet references previous instances of political turmoil that sectors have weathered. “Ultimately, Brexit didn’t turn out to be the disaster for the UK's tech industry that many feared,” he remarks. The Accel study still ranks the UK as the top choice for initiating a generative AI business.

Stanislas Polu, a former member of OpenAI who founded the French AI company Dust last year, believes the sector is robust enough to withstand any challenges it faces. He acknowledges that some results may be somewhat bleak, particularly in terms of personal finances. "Navigating through a period of increased uncertainty is always a bit more complex," he notes, expressing hope for balanced governance in the country. "That's essentially what we're aiming for," he adds.

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