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The French Government’s Exquisite Bullying

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

The French government is saddled with enough problems; in theory, it no longer needs to create new ones. But now it wrote another excellent chapter in its tome on how to interfere with private-sector businesses, hamper entrepreneurs, and encourage them to start up their operations elsewhere instead of creating jobs in France.

Yet, President François Hollande had declared on May 1, after the rolls at the unemployment office had swollen 11.5% in 12 months to an all-time record of over 3.2 million people, that the policies the government was implementing had "only one goal: to win the battle of employment.”

Powerful words. And just that. Beneath the surface, his government continues to kick at businesses. The latest was directed at two major companies trying to make a deal – but it hit all startups in France.

Yahoo wanted to acquire Dailymotion, a French video-sharing site, the 12th largest in the world, and one of the most successful French startups, though still a dwarf compared to YouTube. It was founded in 2005. In 2006, it raised €7 million in venture capital. In 2009, the state-owned Strategic Investment Fund (FSI) plowed €7.5 million into it as part of a €17 million round. “We are one of the rare French players that can participate in the future consolidation,” said Dailymotion CEO Cedric Tournay at the time.

In 2011, France Télécom – the former state-owned telecom monopoly in which the government still holds a 27% stake – acquired 49% of Dailymotion. In January 2013, it acquired the remaining 51%. Then it tried to find an American partner for Dailymotion that would develop the platform and expand its reach internationally, particularly in the US. It made sense. It might never be the next YouTube, but it would need to get bigger to thrive.

Hush-hush negotiations had been going on for months with Yahoo. But four weeks ago, alarmed by leaks that Yahoo wanted to acquire 75% of the company, the Ministry of Finance and the Ministry of Culture expressed their strong doubts about the appropriateness of the deal. And on April 12, the deal blew up. Industrial Renewal Minister Arnaud Montebourg was meeting at his office in Paris with Yahoo COO Henrique de Castro and France Télécom CFO Gervais Pellissier. “I won’t let you sell one of France’s best startups,” Montebourg told Pelissier. “You don’t know what you’re doing.”

On April 23, an unnamed source “close to the Ministry of Finance” told le Monde, that Dailymotion was one of the few successful content platforms France has managed to put on the Internet in recent years. “This is a real gem,” the source said. “And it doesn’t even lose money. It would be a shame to let it go.”

The verdict of the government. France Télécom CEO Stéphane Richard was angling for a second term. He didn’t want to get into a fight with the largest and omnipotent shareholder, the government. He had to toe the line. So he decided to scuttle the discussions.

And selling less than a controlling share? Yahoo asked for “at least three-quarters,” an unnamed source at France Télécom told le Monde; it wanted “to be able to integrate the platform into its content; it’s not interested in a minority participation.”

On Wednesday, Montebourg confirmed that he’d intervened to block the acquisition of this “gem” to preserve its identity. “We want a balanced development. We are for a 50-50 solution,” he said, referring to the alliance between Renault and Nissan that preserved the identity of both companies. “It is the interest of France and in the interest of Dailymotion.”

“Montebourg is sending a bad and wrong signal to international investors,” said Jean-David Chamboredon, president of ISAI, an internet startup fund. He’d become famous last September when he published an explosive essay about the government’s anti-startup policies – “La France du business stopped breathing,” he wrote. It hit a nerve with entrepreneurs, artisans, and mom-and-pop business owners whose ire spread across the social media [read.... A Capitalist Revolt in Socialist France].

Keeping this “gem” out of foreign hands was “in the interest of France and in the interest of Dailymotion,” Montebourg claimed. If it had a technology that intelligence services relied on for their communications, OK. But Dailymotion is an also-ran video-sharing site that needs the right partner to survive and thrive.

So, Montebourg and his ilk have once again confirmed to private-sector businesses, from giants like France Télécom to startups struggling to make a dent, that the government would bully them into complying with a convoluted industrial policy that has already caused so much damage to the economy. This sort of short-term thinking geared towards “saving” a few jobs on TV or making a patriotic gesture for political purposes is alarming entrepreneurs whose dream it is to build companies, create jobs, and sell their dreams after years of blood, sweat, and tears – without being bullied by the government. And this event was one more reason for French entrepreneurs to set up shop elsewhere – a trend that has been picking up momentum.

Spain, the youngest democracy in Western Europe, has lost its innocence. After the betrayal of so many hopes and promises, after so much top-level corruption, reality is dawning on the people about Spanish democracy and EU membership. Read.... Spain Loses Faith: from the Most Europhile to the Most Euroskeptic in Five Years.

 

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Fri, 05/03/2013 - 09:39 | 3526438 pashley1411
pashley1411's picture

I dunno if people in the US should mock the French at their political options.   Glass houses and all that.    Le Pen was interesting.

Fri, 05/03/2013 - 08:17 | 3525952 Sandmann
Sandmann's picture

France Telecom is the kiss of death. They destroyed Orange which was great under Hans Snook and had great customer service. It is now a dog called EE merged with Deutsche Telekom's dog T-Mobile originally known as One-2-One

Fri, 05/03/2013 - 08:14 | 3525945 BeetleBailey
BeetleBailey's picture

Fuck the French.

 

Literally.

 

Some hot babes over there. Good wine. Cheese. Beaches. the Rivera

 

Other than that - cow country. Paris smells. Prices are sky high for fucking everything. Lousy with Muslims and low-life scum bags leeching off the gubbermint. Speaking of them, they really...really blow.

 

Le Douchebags en mass.

 

Fri, 05/03/2013 - 08:45 | 3526122 brucyy
brucyy's picture

Sadly french hot babes do not surrender easily . merde

Fri, 05/03/2013 - 02:20 | 3525548 AbbeBrel
AbbeBrel's picture

Hey we have Minitel - what more do we want!   Ooops the service is retired now?   Mon Dieu!

Fri, 05/03/2013 - 01:27 | 3525461 WTFUD
WTFUD's picture

I remember being ecstatic , well elated, when Hollande triumphed over Sarky. Not alone as witness the joyous relief of mainly young possibly first time voters and working people in general in the immediate aftermath on the streets when the result was officially announced. Much of a muchness and baked in similarities the dismantling of the berlin wall and Obozos 1st term hopium victory scenes of jubilation.
Well fuck me haven't the last 25 years been worth waiting for?

The good news ; Hollandes victory over Merkels buddy has exposed the cloud cuckoo land mentallity of the french as Sarky like his expensive suits and Tony Blair fake cheesy grin managed to paper over the grim reality of the long term economic demise of france. Therefore in my book the hiding to nothing in victory for Hollande has brought the shit to the fore; a good thing; not allowing the ECB/IMF/WORLD BANK/ Bankstas Politicos and Elites with the aid of MSM to carry on the Charade. Vive le France

Fri, 05/03/2013 - 01:13 | 3525443 BlackVoid
BlackVoid's picture

Actually, selling anything to yahoo or any other US megacorp is totally dumb.

(Giving it to french megacorps is also stupid though)

Fri, 05/03/2013 - 01:10 | 3525440 GoldIsMoney
GoldIsMoney's picture

" Read.... Spain Loses Faith: from the Most Europhile to the Most Euroskeptic in Five Years."

 

What a surprise the looters have got very much from the EC in the past, have build their bubbles with it, this bubbles have bursted and now it's of course the bad EC. That all the payments were wrong and misguiede into the housing markets, who cares? The show should have go on forever. The looters love such kind of things. 

They deserve every hardship, that will come. They believed in the "merits" of getting rich quick without any work. And they have choosen the parties which promised them to get rich that way. I'm really hoping the othes looters will get paid the same way. 

Thu, 05/02/2013 - 23:23 | 3525230 dunce
dunce's picture

Oil, iron, coal, and a thousand other things are geographically locked but  these kinds of companies can operate from anywhere, no govt. can hold them in their clutches without smothering them.

Thu, 05/02/2013 - 21:37 | 3524924 Joebloinvestor
Joebloinvestor's picture

How typically French.

Yeah only let foreign investment get involved with the shit they don't want.

Thu, 05/02/2013 - 18:57 | 3524344 walküre
walküre's picture

http://www.stepmarket.org/

http://www.dangerous-finance.eu/proposals/short-term-european-papers-ste...

Trading with Short Term European Papers (STEP) on the so-called “STEP market” is not allowed for the public. However, since STEP products are accepted by the ECB as eligible assets, an abuse cannot be excluded. For example, two financial institutions can lend each other STEP products and provide them to the ECB in order to receive cash.

It has to be taken into consideration that the trade with such over-the-counter (OTC) products were one of the  main causes of the financial crisis in the US.

France has been given carte blanche to print as much liquidity as they would ever need.

http://deutsche-wirtschafts-nachrichten.de/2013/04/14/geheim-operation-d...

STEP is primarily being used to support the French banking sector with unlimited collateral which can be deposited with ECB to have unlimited access to liquidity. French banks are either close to being insolvent or flat out broke without the provisions via STEP.

http://www.zerohedge.com/news/2013-01-07/more-central-bank-gimmicks-expo...

ECB is a basket case. Draghi caved in to the French. The Germans are pissed and the relationship between France and Germany is in getting more sour each day.

When the relationship between Germany and France turns sour, it will be the end of the EZ and the Euro. Nevermind the Club Med. France is taking Germany for a ride and the last time that happened, we had a war followed by another war.

Thu, 05/02/2013 - 20:12 | 3524596 SAT 800
SAT 800's picture

Dont' worry, the French will surrender earlier this time.

Thu, 05/02/2013 - 18:35 | 3524317 Peter Pan
Peter Pan's picture

Can someone help me out?
I am trying to think of a stronger term than idiots without calling them f...wits.

Thu, 05/02/2013 - 21:59 | 3524987 are we there yet
are we there yet's picture

Frogie brained? Mime minded? French Homer Simpson?

Thu, 05/02/2013 - 21:47 | 3524943 mjcOH1
mjcOH1's picture

I think you"re looking for "bureaucrats".

Thu, 05/02/2013 - 17:15 | 3524033 Volaille de Bresse
Volaille de Bresse's picture

hey you US citizens fail to grasp ONE French reality : the "elite" ENA school which makes "énarques".

80% of our Presidents and Ministers are former "énarques" and they proverbially don't know shit from Shinola. They live in their own reality and they're TOTALLY incompetent. If Bernanke had been French he certainly would have been admitted to ENA. He had the "qualifications" : utter stupidity and a capability to hide his hollowness behind smooth talk. 

Destroy the ENA school and deport to a far-away island ALL the "énarques" and France has solved half its problems. 

Fri, 05/03/2013 - 08:07 | 3525918 Fezter
Fezter's picture

Maybe they can join forces with Harvard and together they can rule the galaxy as father and son.......

Thu, 05/02/2013 - 20:11 | 3524582 SAT 800
SAT 800's picture

Is Tahiti far enough away? It's a department of France, that should make it easier. Maybe they could control the coco-nut market; that should keep them occupied.

Thu, 05/02/2013 - 22:33 | 3525095 FeralSerf
FeralSerf's picture

Why ruin Tahiti?  Kerguelen or the Îles Crozet would be a far better place for them.  There's also fewer flights back.

Thu, 05/02/2013 - 16:53 | 3523971 OpenEyes
OpenEyes's picture

Wow, that shit is straight out of Atlas Shrugged!  

Thu, 05/02/2013 - 15:44 | 3523682 thisandthat
thisandthat's picture

When you look for foreign investments, the goal is to bring new investments, not just cannibalizing existing ones with not so much (if at all) real benefits for the economy.

Fri, 05/03/2013 - 07:48 | 3525876 Urban Redneck
Urban Redneck's picture

When a French business leader says of a French business - "AND IT DOESN'T EVEN LOSE MONEY" - nothing more needs to be said of either the culture or climate of business in France.



Thu, 05/02/2013 - 20:05 | 3524561 SAT 800
SAT 800's picture

They're not "looking" for foreign investments. When Thomas Jefferson bought the central part of the United States from France in the form of the "louisiana purchase"; it wasn't because France was looking for foreign investments; it was because they were flat fucking broke; busted; caught with a four card flush. they had just finished another famous French experiment with paper currency. History may not repeat itself, but it sure rhymes. The foreign investors are picking over the choice parts of the carcass; or trying to; while the govt. mouthpieces are trying to pretend it hasn't yet got to the point where they need to sell the middle portion of the United States for 3$ an acre; but it has. Just today I read a nice article on Market Watch where the author referred to the Euro as "the worst currency system ever conceived"; well, maybe. It's a contender, anyway, and a French-belgian invention; but some of their previous currency experiments are going to be really hard to beat for worst ever. Just remember, the Euro is going down the bowl where it belongs and you want to be in physical metals when it does; because it's going to cause a whole lot a shakin' in the barn; the barn where the majority of shallow thinking business as usual cud chewers hang out.

Fri, 05/03/2013 - 01:00 | 3525416 thisandthat
thisandthat's picture

Frankly, who would want someone like Yahoo getting their hands on a fairly decent and functional site such as DM? In a few years it would've probably been moved abroad, with no real benefits for the French economy, and turned into a bloated, advert ridden, corporate media driven site if not just plainly succumbed and turned into an actual carcass through mismanagement, and shutdown and shelved for good.

And then there's the plurality of information (cultural, political) issue - presently you're able to watch things in DM you just can't on YT, with its pc/dmca censorship, nor you need to register/login and get tracked, logged and spied upon, and that would definitely be lost if it became yet another US corporate outlet, which probably played its part in the French decision.

Btw, still remember when the Chinese tried to take over US ports and everyone simply freaked out and end up vetoing the operation, just what Mr. Hollande did there...

Fri, 05/03/2013 - 04:55 | 3525687 i-dog
i-dog's picture

 

"Frankly, who would want someone like Yahoo getting their hands on"

Frankly, it's nobody else's business other than the shareholders. Private capital and entrepreneurial skill built it...then the parasites move in and start dictating who can do what!

Keep your nose (and guns) out of other people's business. Having an opinion is one thing - and you are right to express it. However, using the guns of the state to coercively enforce it is another thing entirely, no matter how many 'outsiders' agree with you.

Fri, 05/03/2013 - 18:25 | 3528744 thisandthat
thisandthat's picture

Guess what, the French goverment actually IS a shareholder, through the FSI (http://fr.wikipedia.org/wiki/Fonds_Strat%C3%A9gique_d%27Investissement)

But how's this for a dose of "free market" hypocritical nose, guns, whatever:

http://bookstore.piie.com/book-store/3918.html

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/11/AR200612...

Thu, 05/02/2013 - 23:01 | 3525178 Arthur
Arthur's picture

Maybe all of us Zero Hedgers could chip in and buy Tahiti, it's a department of France.  It would be nice to diversify beyond gold.

Thu, 05/02/2013 - 23:12 | 3525200 bunnyswanson
bunnyswanson's picture

Failing that, ZHers buying Tahiti, I suggest the following, purchase land parcels in Galt's Gulch, Chile and rent them out to your iggest fans! (since coming here has surely labeled us "tourists" and on some list or more precisely, paper activists who dare to question govt policy late at night when 1 too many chardonnays/scotches/ whatever is availble encourage us to actually speak our minds.

 

http://taxpol.blogspot.com/2013/02/galts-gulch-chile-randian-utopia.html

Galt's Gulch Chile is being designed to be a fully self-sustaining community, affording those who live there an abundant and unending supply of fresh drinking water from the natural springs located throughout the mountains and valleys of the community, clean and renewable energy from hydroelectric and solar power generation, organic fish from the scenic manmade lakes...and a plethora of organic fruits, vegetables and nuts, born from the fertile soil and the ideal year round climate of the region.

Thu, 05/02/2013 - 15:38 | 3523651 falak pema
falak pema's picture

show me a first world country not caught in the web of democracy's destruction via financialista concoction of Reaganomics's oligarchian dystopia; and I'll show you Utopia.

What they have sowed over thirty years we now reap in viral fiat inflation. 

Resolution comes from killing the cause to avoid the effect. 

But first we have to identify and accept what the cause is...before its too late like in 1939...

testo pit and looking for pork spermatozids of totaliitarian swine, in the alleys of oligarchy crime fest.  

Thu, 05/02/2013 - 23:14 | 3525203 bunnyswanson
bunnyswanson's picture

the banks.  Nationalize if you must, but yeah...it's the banks.

Thu, 05/02/2013 - 20:08 | 3524569 SAT 800
SAT 800's picture

it has nothing to do with Reagonomics; try reading; it won't actually give you a headache like your friends said it would; you too could learn something.

Fri, 05/03/2013 - 09:46 | 3526455 falak pema
falak pema's picture

Ever read Paul Craig Roberts, the man who invented that iconic name ?

His testimony on what that trend, how it morphed into rampant deregulation and exuberant hubris to corrupt US mindset (and MT's concomittant big bang orchestration, based on crony financialista banksterism and tax haven trusteeship accorded to foreign oligarchs, all jointly created by them like twin towers of babel), is the best charge against the current face of what Pax Americana has become post Reaganomics, now under seamlessly implemented NWO subsequently installed by its faithful Bush/Cheney inheritors; all dire ideologues fed on the same logic of intolerance, the elitist hegemonial mantra.

Here is what Market watch NOW belatedly has to say on that :  

http://www.marketwatch.com/story/capitalism-is-killing-our-morals-our-fu...

The sanctified defenders of free market capitalism are now burning their boats with Ronald and Maggies' frankenstein concoction. 

When the catholic kings of capitalist orthodoxy, who dogmatised their aversion to the "road to serfdom", become its most unwitting proponents, the irony cannot escape those who boarded the Titanic of Oligarchy capitalism.

'Cos their legacy has born this toxically venomous fruit from that very tree called Reaganomics.

We are in that illusionary garden of eden now owned by the serpent. What they have sowed we now reap.

Fri, 05/03/2013 - 10:56 | 3526785 El Viejo
El Viejo's picture

+1  BUT the real damage is done later by those with no real thoughts of their own.  If a little does a little good then more will do more good. Every politician says, I can ramp it up and stay in office and some other poor schmuck will take the fall later on. (This is why we need term limits) We live in an age of extremism only it didn't seem extremist at the time. Like a frog in boiling water.

Finally, Bill Clinton repealed Glass-Steagall and George Bush signed the anit-bankruptcy law which enabled John Corzine to do what was once called fraud. What were they thinking?

Liberallism isn't always left wing. The bankers always like liberal financial laws. Bork's book title says it all, "Slouching Towards Gomorrah". Well, welcome to Gomorrah.

Fri, 05/03/2013 - 09:44 | 3526454 falak pema
falak pema's picture

...

Thu, 05/02/2013 - 22:25 | 3525059 FeralSerf
FeralSerf's picture

"Reagan proved deficits don't matter.” -- Dick Cheney

Fri, 05/03/2013 - 08:18 | 3525956 Sandmann
Sandmann's picture

Dick Cheney proved that surpluses were impossible and Government cash passes through Halliburton invoices

Fri, 05/03/2013 - 10:14 | 3526592 Temporalist
Temporalist's picture

Cheney proved it's possible to live without a heart or morals.

Fri, 05/03/2013 - 13:02 | 3527502 ParkAveFlasher
ParkAveFlasher's picture

That which does not live, needs no heart.

Thu, 05/02/2013 - 15:33 | 3523628 Sanksion
Sanksion's picture

Comme disait booba : ouvre ta bouche et pose ton front sur mes abdos. 

Thu, 05/02/2013 - 15:31 | 3523623 Rustysilver
Rustysilver's picture

I am bidding on that French presidential wine. Who's joining me.

Fri, 05/03/2013 - 11:36 | 3527121 max2205
max2205's picture

Yahoo blows so who cares....

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