Emmanuel Macron’s digital report card

This article is also available in: French

When Emmanuel Macron first burst into the limelight, he seemed like a godsend for European techies.

The 39-year-old owner of two iPhones, known as an obsessive user of the Whatsapp and Telegram messaging apps, would help transform Europe from tech regulator to digital innovator, while making France a leader in “hyper-innovation.”

Six months later, if Europe’s tech elite were to offer a progress report on Macron digital agenda, it would read: “Top marks for ambition. Still plenty of work to do to reach his full potential.”

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Industry players and other EU leaders have faith in Macron’s intentions to make Europe a global player in tech. They note that he galvanized debate on the need to complete the EU’s digital single market, reformed French labor rules, announced the creation of a €10 billion investment fund in France and planted a seed for a European “innovation agency.”

But many of Macron’s promises remain just that: promises. Some critics fault him for overreaching, in a way that exposed divisions between EU nations and confused tech companies. One initiative managed to do both: a French-led push to tax web giants like Google and Facebook on revenues they generate in European countries.

If Macron were a student in a French lycée, such a move might have earned him a reprimand for being hors sujet — or off topic, one of the worst sins a student can commit in that system.

What follows is a POLITICO report card on Macron’s tech policy. Grades are on a scale from 0 to 20, just as they would be at the Lycée Henri IV, where he completed his high school studies.

Bonne chance, Emmanuel.

Taxation

What his teachers say: As usual, Emmanuel had the right idea. He applied his bright mind to the task — optimizing taxation of digital firms — and determined that governments needed a better approach. Classmates were slow to find a solution, so Emmanuel proposed to start taking a slice of each firm’s gross revenue in the country where it was generated. Thanks to his charm and smooth talking, he enlisted 19 classmates in favor of his idea. But when the rest of the class examined his proposal, they had questions: Why tax only web firms? Won’t startups suffer? If Europe is the only region with such a tax, won’t big tech firms reduce their footprint there? Emmanuel had to scale back his ambition. Granted, the European Commission will include his proposal in a list of options for improving digital taxation, to be submitted next year. But by moving too quickly, Emmanuel missed the mark on this one.

What classmates say: Some loved Emmanuel’s approach. Others said it is unfair to digital firms and risks making the EU look protectionist. “The increasingly virulent stigmatization of (web-based) platforms … is in our view somewhat inappropriate given the services they provide and their appeal to the French population,” said Loïc Rivière, managing director of lobby group TechinFrance. “Cracking down on big tech platforms always means cracking down on small platforms first,” said Lenard Koschwitz, director for European Affairs of Allied for Startups, another lobby group.

Overall appraisal: Emmanuel certainly got the debate going on digital taxation, but his approach fostered some division, and may not win out at the end of the day. He needs to refine his diplomatic skills.

Grade: 9/20

Investment

What his teachers say: Emmanuel is a poetic soul with grand ambitions. Presenting his project for tech, he invented a word: “hyper-innovation.” The class loved it, and so did the European Commission, which named Paris Europe’s capital of innovation and awarded the city a €1 million prize. Techies cheered when Macron vowed to get venture capital funds for tech flowing in Europe, via a €10 billion French fund for innovation, a €1 billion Franco-German fund, and a European innovation agency modeled after the United States’ Defense Advanced Research Projects Agency. But they are still waiting for the money. The €10 billion fund, financed via sales of French state-owned assets, will not be online for years, and when it is up and running, only its dividends will be used for tech projects, providing just €100 million to €200 million per year. The Franco-German fund is still embryonic. And so is the European innovation agency: an exciting idea, but for now, just that.

What his classmates say: Sure, Europe is no Silicon Valley when it comes to venture capital for startups. But Macron has done it plenty of good anyway. In France, he’s reformed a rigid labor code that caused small firms plenty of headaches, and he’s getting ready to slash social charges and a much-decried wealth tax, a move that his government says will release €3 billion into the economy and make France much more welcoming for potential investors. “Macron is doing a lot to make France a more attractive place for tech investors. Obviously, a lot of this is happening at the European level, and will take time to bear fruit. But we appreciate the positive signal,” said Yves Weisselberger, founder of the Snapcar ride-sharing app.

Meanwhile, his fellows in the EU hope Macron takes an inclusive approach to tech investment. If he chooses to work only with Germany to launch new agencies or investment funds, Central and Eastern EU countries could be left out. “On a European level, we need more coordination,” said Krzysztof Szubert, the Polish digital ministry’s secretary of state and EU negotiator.

Overall appraisal: It will be some time before Europe has a broad stable of tech unicorns — firms valued at over $1 billion. But insiders appreciate Macron sending the right signals.

Grade: 13/20

Digital single market

What his teachers say: Emmanuel gets top marks for public speaking and motivating his classmates. His performance at the Digital Summit in Tallinn at the end of September reinvigorated the EU’s passion for digital and kickstarted talks on a number of European initiatives.

But Macron loses some major points for a lack of originality. Some might even call it an egregious case of plagiarism. A rule he proposed to force platforms to become more transparent in how they treat less powerful players is a copy-paste job on proposals put forth by his predecessor, François Hollande. His transparency rules — designed to prevent big platforms from de-listing or pushing down their competitors — may seem like an original thought. In reality, they are simply an initiative launched by the previous French government wrapped up in new PR packaging.

What his classmates say: All in all, they seem to think their peer has the right idea. Member countries are happy that someone powerful is pushing the digital discussion forward. The European Commission is happy to see Macron defend ideas similar to its own, including a transparency mechanism due to be put in place early next year. Like the French, the Commission wants to give small third-party sellers stronger negotiating power.

Where Macron falls short is in advocating a revenue tax for big tech companies, a move that tech insiders say goes against the spirit of the EU’s digital strategy. “It will break the digital single market,” a tech industry lobbyist said of Macron’s broader platforms and tax proposals. Others worry that such moves may mask a less welcome agenda. “We do need to have Europe moving forward on the digital agenda,” a Northern European diplomat said. But, the person added: “We will look carefully so it doesn’t turn into French protectionism.”

Overall: Macron seems to grasp the basic concept of a digital single market, but it’s still not clear if he will take a more protectionist route, burning bridges with his fellow classmates.

Grade: 15/20

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