Silicon Valley Runs Scared from France
Emmanuel Macron has fashioned himself as many things: reformer, savior of the Fifth Republic, Marine Le Pen blocker, Trump whisperer. But the one image that might stick with him long after he is out of the Elysée is Silicon Valley Saboteur, and the events of the last week show us just how hard Macron is willing to hit.
Seemingly out of nowhere, and in stark relief to the prevailing feelings in the American corporate world when the French elected a youthful, tech-savvy president, big tech companies are spooked by France.
What’s more, their fear comes not from the country’s massive market power or regulatory bite. It’s from a deeper fear that France has learned to use the formidable power of its state to hit tech companies where it hurts: their revenues. France’s proposed 3% tax on revenue is designed to apply to firms with more than 25 million euros in French revenue and 750 million euros in revenue around the world.
This tax is important, because it would slam a door on the tax optimization strategies long used by companies like Google and Facebook to book profits in jurisdictional headquarters like Ireland, with no regard to where the revenue originates.
Even Washington is running scared
American politicians are spooked too, and their response to France’s recently-passed tech tax was far more stringent and paranoid than their responses to any of Europe’s many attempts to rein in Silicon Valley companies to date.
From the beginning, Macron has taken a methodical approach to big tech companies. His approach to Facebook serves as the best example of how he used the goodwill and optimism surrounding his rise to power to gain unprecedented access to the platform, gain the trust of the company’s leaders, and use it squarely against them.
Unlike many of his peers in Europe, Macron has approached this problem legislatively, making a priority of building a social and legislative case for limiting different powers of tech companies within France. He has also enlisted a diverse and respected group of legislators from across the governingLa Republique en Marche! party to commission informed and meticulous congressional studies, including one on hate speech and violence on platforms like Facebook.
This matters: throughout Europe, tech companies have largely faced regulatory scrutiny, and the occasional sniping from Parliaments like Britain’s. But it has not faced the combined power of a strong executive and a hostile legislature quite like it is facing in France right now.
Projecting France’s power far and wide
Unlike legal battles waged after executive decisions, or influence campaigns aimed at regulators, France’s legislation is far less likely to be swayed by the big lobbying machinery that tech companies have employed during similar battles in Europe. It doesn’t take a French constitutional scholar to understand where French courts will place the benefit of the doubt, particularly in response to legislative action.
Will other countries follow? Of course they will, and there’s evidence that France’s model may provide a very transferable template to governments across Europe and potentially beyond. On the back of France’s announcement, Austria, Italy, Spain and the UK announced that they were in the process of formulating similar tax regimes for revenue in their jurisdictions.
The Trump administration was quick to pick a fight with France on the proposed taxation. But with the mood in Washington quickly souring on the market power of Big Tech companies, it’s unlikely to be willing or able to push back when allies across the European Union begin to implement similar taxes.
President Macron, in turn, may have built a legacy that lasts far beyond his term, boosting France’s power and stature on one of the biggest geopolitical questions of our time.
