France Telecom irked by minister scuppering sale of Dailymotion stake

Industry secretary unhappy at successful domestic venture ending up being controlled by US giant Yahoo

France Telecom has castigated the government, its largest shareholder, for derailing its plan to sell a majority stake in video-sharing website Dailymotion, reigniting debate about state interference in the French economy.

France Telecom has castigated the government, its largest shareholder, for derailing its plan to sell a majority stake in video-sharing website Dailymotion, reigniting debate about state interference in the French economy.

Yahoo had been in talks to acquire a 75% stake in Dailymotion, which competes with Google’s YouTube. But industry minister, Arnaud Montebourg disliked the idea of one of France’s most successful start-ups being “devoured” by Americans and pushed for a more “balanced” partnership with 50-50 ownership, leading the talks to collapse and leaving France Telecom to search for another partner to help Dailymotion grow abroad.

Chief Executive Stephane Richard said state intervention was inappropriate. “Dailymotion is a unit of France Telecom and not of the state. It is the company, its management and board that should manage this issue,” he said in an interview with newspaper Les Echos. He said he would seek another partner.

The episode is the latest clash between President Francois Hollande’s Socialist government and business leaders, one of the earliest being his campaign pledge to impose a 75% supertax on high earners.

France’s technology sector is one of the economy’s bright spots, with the country ranking third in Europe behind the UK and Germany in terms of venture capital investment last year.

Jean-David Chamboredon, a long-time venture capital investor in France, said France Telecom was not capable of giving Dailymotion global reach and Montebourg’s decision was a big mistake. “Yahoo would have had no reason to hollow out Dailymotion. On the contrary it would have likely made the company stronger and possibly hired more video engineers in France because they cost less than in Silicon Valley. Investors who might want to be active here could think twice out of fear of government interference,” he said.

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