France is engaged in a war of technological independence on two fronts against the United States and Asia. It is losing the battle of the brains both in the draining of its STEM talent and to an epidemic of illectronisme among its native population - a scourge that threatens to dwarf Covid-19 in its capability to damage the economy. France Digitale, a Frenchtech lobby group representing startups and investors, has sallied forth and is asking Paris to re-arm the nation in its struggle for digital sovereignty.

This fighting talk can be found in their 47 page proposition Alternatives, published 26 May 2020 in which they note how, during France's spring 2020 coronavirus lockdown the nation was obliged to switch abruptly from existing public and commercial systems, relying heavily on paperwork and personal meetings, to a digital domain operated by foreign tech giants and quirky startups. The bad news, admits France Digitale [FD, 1], is that their membership of around 1500 French startups were largely ignored in this online boom in favour of American solutions.

Announcement: combat/ALT.ernatives [2]

Document: France Digitale Alternatives May 2020 (PDF) [3]

Careful to share the blame, they assert that startups have an image problem (being associated with gadgets or gimicky solutions), that public and private sector organisations were poorly prepared for lockdown, and that many ordinary French people have illectronisme - meaning that they are IT illiterate

Coming out of confinement [lockdown], all the data and evidence collected for this work point to a frightening technological disarmament of our country.

Alternatives p.1 Au bout du tunnel du confinement, toutes les données et témoignages recueillis pour écrire ce plan de redirection pointent le terrifiant désarmement technologique de notre pays.

Their proposals are aimed at the Paris administration and suggest a post-COVID relaunch plan that does not attempt a return to normal but instead offers alternatives to give the nation a technical upgrade. Despite being overlooked by the French in their hour of need, the group insists that its startup constituency is still the best equipped to lead this “Made in France” re-armament.

Two years, €20 Billion

Over the next two years the plan asks for

Much is expected of Paris: the central government and its regional institutions are asked to go 100% digital and to implement a large number of new tax incentives and administrative changes to drive the plan. Bpifrance, the sovereign investment bank is heavily implicated.

The crisis revealed the slow, sometimes dysfunctional nature of some public service provision, and the striking need for the public sector to work on their digital transformation plan especially concerning teleworking.

Alternatives p.9 La crise a révélé des lenteurs voire des dysfonctionnements dans la continuité de certains services publics, et le besoin criant des services de l'Etat d'opérer leur transformation digitale, notamment en matière de télétravail.

Individuals are called upon to do their bit in a project of mandatory IT education, starting with du jour subjects such as AI and blockchain in primary school, and are encouraged to use periods of furlough or unemployment for IT training. Rewards are offered in the form of personal tax breaks and handouts for the purchase of reconditioned hardware.

The commercial sector is asked to make room for startups and SMEs in the hustle for government contracts and funding. Tax incentives are offered to investors but with eligibility conditional on measurement against Four Criteria for Responsible Technological Investment that include metrics such as transparency, staff diversity, pay ratios and philanthropy.

The startups themselves are asked to incorporate environmental and social programs and to offer more attractive equity-based incentives to staff. Access to future funding would depend on the extent of their commitment to an environmental transition. They would be subject to annual audits with possible sanctions for failure to fulfill their obligations.

France Digitale insist that they are not presenting Paris with a begging bowl, but are instead looking for money to be spent on startups indirectly via tax, investment and employment benefits.

Marché aux Puces?

Their call to arms is riddled with 191 bullet points and list items.

Identified among these are 77 actionable recommendations. These are grouped around 15 key proposals that are in turn aligned on 4 strategic axes: technological re-armament, investment, job creation/protection and environmental transition.

Each of the recommendations imposes an action or requirement on some sector of French society and results in benefits to one or more (other) sectors.

The five sectors (defined by this review, not explicitly mentioned in the source document) are

In terms of impositions, i.e. what is asked of them, The public sector bears the heaviest burden of expectation with 59 requirements. Individuals are purely beneficiaries (unless one counts mandatory educational programs as an imposition).

Impositions

59  
11  
8  
2  
0  

As for benefits, startups and other entrepreneurials are the clear winners at 35, with individuals and investors also favoured.

Benefits

35  
24  
20  
14  
5  

Bear in mind that the numbers in the graphs need not sum to 77 because some recommendations have multiple impositions or benefactors.

Categorising the recommendations by type as either administrative policy actions, boosted investment funding or tax incentives shows a bias towards administration and funding.

Recommendations by type

32  
26  
16  
3  

Sovereignty, Solidarity and Protectionism

The use of digital services developed during the confinement period supported the [existing] superiority of non-European solutions. With the domination of American tech giants, the technical sovereignty of Europe and the extent to which European states are prepared to invest in their domestic and continental startup culture must be addressed.

Alternatives p.1 Les usages numériques développés pendant la période de confinement ont conforté la supériorité des solutions extra-européennes. La domination des géants technologiques américains pose la question de la souveraineté européenne et de l'investissement que les pouvoirs publics sont prêts à prioriser pour faire émerger de leurs écosystèmes nationaux de startups des champions technologiques continentaux.

Digital Sovereignty is a hot topic in Europe and much money is likely to be spent in the coming years in attempts to ease the continent's dependence on American and Asian tech. With a scope of two-three years and €20 billion this is a relatively modest plan which will have to compete against many other relaunch proposals. Understandably French startups are at the heart of this work but the broader ambition is for the nation as a whole.

This relaunch plan may be one small step in a larger moonshot program for Eurotech that would need deeper pockets.
Quoted in Le Figaro [4], France Digitale CEO N. Brien drew attention to a larger pot of money - approximately €60 billion that has accumulated in the personal savings accounts of middle class French families as a result of reduced spending during the lockdown period. Brien thinks this money could be better used and referred to it being squirreled away as a heresy.

The document also mentions the French PACTE initiative [5] that includes, as one of its provisions, orientate French citizens’ savings towards companies’ equity capital to fund future growth and innovation

This [national] investment effort should be part of a continent-wide relaunch plan - one of at least 1000 billion Euros, with priority given to digital transformation if it is to achieve its goals.

Alternatives p.11 Cet effort devra s'articuler avec une volonté de relance continentale : un plan de relance européen de 1000 milliards d'euros ne saurait atteindre ses objectifs sans intégrer une priorité à la transformation numérique.

Although Europe-wide investment is called for, the goal of French sovereignty is emphasised over that of continental independence. Throughout, the word Europe is used interchangeably with EU.

Collaboration with other European groups is mentioned explicitly in two cases (AI conferences and trans-Atlantic promotion). In place of cooperation some of the recommendations promote French interests by the redistribution of existing continental resources and with measures aimed at levelling the competitive field where France seems disadvantaged.

For example the UK is asked to return €2.3 Billion given to it by the European Investment Fund. Fellow EU nations are cited once, in a demand that France be able to benefit from the European Angels Fund that is already active in neighbouring states.

As already mentioned FD wants French companies to sign-up to policed environmental obligations to qualify for funding. As this may impede their competitiveness, it's suggested that other European nations adopt the same constraints so that Gallic SMEs are not at a (continental) disadvantage.

Using a 3-step methodology proposed by France Digitale and Fabernovel, to commit a company to eco/social transition …

… Europe-wide application for these measures so as not to create distortions between French and non-French companies.

Alternatives p.38 - 39 Engager l'entreprise dans une démarche de transition écologique et solidaire, en se référant à la méthodologie proposée par France Digitale et Fabernovel, fondée sur 3 étapes :…
… Étendre au niveau européen l'ensemble des mesures précitées afin de ne pas créer de distorsions entre les entreprises françaises et les entreprises non- françaises.

Another whiff of protectionism is detectable in the many tax breaks and incentives proposed for the purchase of reconditioned IT hardware. Although clearly an environmental gesture, widespread uptake of this scheme would reduce demand for Asian-made products. Being saddled with usable but outdated gear may be a driver or a brake on innovation depending on how one looks at it.

The plan enthuses for the creation of «non-délocalisable» jobs, meaning positions with permanent contracts that are locally implanted and protected from outsourcing or brain-drainage.

In a challenges.fr interview[6] CEO Brien talks of companies having a financial cushion based on emergency relief and government loans until April 2021 (when repayments are due), and beyond that date?… responding to the suggestion of a 'Darwinian' shakeout of the Frenchtech sector he emphasises the importance of resilience.

Resilience can involve many things: contingency planning, autonomy and independence or conversely being a dependent part of a support network.

'Alternatives' is not a resilience cookbook for startups. It is not aimed at entrepreneurs but rather it asks the Paris administration in particular to drive change in the whole of the society to make it a place where startups can thrive.

They ask the state for contingency support in financing and employment. In what look like protective measures they seek national (and less ardently, continental) independence. They position the state as a key supporting partner - a relationship that may result in a net increase in red tape and dependency on a culture typically conducted by patronage and entitlement.

The coronavirus crisis did not cause the problems that France Digitale is looking to fix, but it certainly drew sharp attention to them and so this plan is a timely reminder that action is needed. By mid-2021 we may be in a position to gauge the first results of this plan, if Paris chooses to support it.

The digital transformation of public services and private enterprise is an exciting aim when put to service for the common good.

We have an historic opportunity. Let's not waste it

Alternatives p.40

La transformation numérique des services publics et des entreprises est un dessein enthousiasmant, quand elle est mise au service du bien commun.

Nous tenons là une opportunité historique. Ne la ratons pas.


References

  1. https://francedigitale.org
  2. https://francedigitale.org/combat/alternatives/
  3. https://tilkee.view-docs.com/a61364d8dc2f/companies/42691/uploads/744453abb1d2bd2aea14a22d/ ff53c67cbea5-Alternatives_Plan_de_redirection_de_France_Digitale_pdf.pdf
  4. https://www.lefigaro.fr/secteur/high-tech/start-up/pour-france-digitale-la-france-a-besoin-d-un-plan-de-rearmement-technologique-20200526
  5. https://www.gouvernement.fr/en/pacte-the-action-plan-for-business-growth-and-transformation
  6. https://www.challenges.fr/high-tech/nicolas-brien-france-digitale-il-faut-un-plan-de-rearmement-technologique_712343

Glossary

EIF
European Investment Fund
Frenchtech
Startups etc in France. They have a web site: https://lafrenchtech.com/
SME
Small and Medium Enterprise. Used here it includes even smaller 'micro' companies and entrepreneurs
STEM
Science, Technology, Engineering, Mathematics