Why Silicon Valley CEOs now have France on their to-do lists

Paris in the spring is always worth a visit, especially if you're a Silicon Valley exec and you've been personally summoned by the president of France.

In late May, the tech world's version of a star-studded event took place in the French capital. Facebook's Mark Zuckerberg, Microsoft's Satya Nadella, Google's Eric Schmidt and scores of other tech leaders appeared at a relatively new and fairly obscure conference called VivaTech. It's a lineup that might not be unusual in California, but in Europe it's almost unheard of.

To understand how the conference managed to snag famed names to appear on its stage, you only need look to France's charismatic, tech-savvy president: Emmanuel Macron. Macron has made great efforts to woo Silicon Valley, and the resulting love story is romance for the ages.

The day prior to the conference, the most high-profile participants attended Macron's closed-door Tech for Good Summit, held at the Elysee Palace, the heavily gilded Parisian mansion that serves as the home of the French president. With 50 tech bosses in attendance, including the heads of Facebook, Intel, IBM, Uber, Microsoft and Cisco, the guest list read like a who's who of the world's most powerful leaders in tech.

The discussions that took place at the summit remain a secret, although pictures of CEOs coming and going with smiles on their faces circulated online. Mark Zuckerberg hadn't looked so cheerful in public for months.

As far as Macron's intentions for arranging this gathering, he is an open book.

"I need you to succeed here," he told the audience at VivaTech as he opened the conference. Many of the CEOs, along with several political leaders, were sitting on the front row. "This is the place to be. This is the new gateway to Europe. Come."

France might be wooing Silicon Valley now, but over the past few years it has established a strong startup community of its own. Bpifrance, the country's state investment bank, invested 191 million euros in 53 startup companies last year.

Tax incentives, visas for tech entrepreneurs and the opening of Station F, the world's largest startup incubator, in Paris' 13th arrondissement, last summer have made the country an attractive place to start a business. This year at CES, the big consumer tech extravaganza in Las Vegas, France was the most represented country for the third year in a row other than the US. Macron has attended the Vegas tech show on several occasions.

"It's fascinating to have seen how the economy here in France and this spirit of entrepreneurship in technology over even the last five years -- it's just been phenomenal," said Chuck Robbins, chairman and CEO of Cisco on stage at VivaTech. "In fact it may be the second most relevant place right now relative to technology startups."

France has put tech at the heart of its economic strategy, said Antony Walker, deputy CEO of TechUK in an interview, and it's paying off. "Silicon Valley is taking France very seriously, I think they are very interested in terms of what Macron and his administration think."

But the French president's passion for the tech sector and for Silicon Valley does not mean he's kowtowing before the tech giants of the world. Quite the opposite, in fact.

Speaking at VivaTech, he urged US companies to embrace European regulation, including Europe's tax rules affecting the tech giants. The EU unveiled a plan in March designed to get big US tech companies, including Google, Amazon and Facebook, to pay more tax in Europe, having previously fined Apple and Amazon for not paying enough tax in the region.

"I am a strong supporter, and I will fight to the end for this European digital tax for big players," said the French president. "I think it's fair." The US model, in which tech companies face limited regulation, is "not sustainable because there is no political accountability," he said.

He also reportedly took a hard line with the CEOs he met in private.

"President Macron just got to the point -- he's very direct," said Uber's CEO Dara Khosrowshahi, also speaking at VivaTech. "He wanted me to demonstrate that we're committed to France, that we're not just going to come here and pull from France, that we're going to invest in France."

The day after speaking with Macron privately, Uber announced it would build a £23.5 million hub to develop flying taxi technology in Paris. "We're not looking for a free lunch," Khosrowshahi said of the investment. "We're willing to pay."

Vive l'intelligence artificielle

Uber is far from the only major company to invest heavily in a Gallic research center. It's in good company, with Facebook, Google, Samsung, IBM, DeepMind, Microsoft and Fujitsu all doing the same. It is, however, the odd one out in terms of focus. While Uber tries to make cars fly, the others are tinkering with their machine-learning algorithms.

"All the big tech companies creating AI bases in France," said Google's Eric Schmidt, speaking on stage at VivaTech.

Google CEO Sundar Pichai announced the opening of the company's own French AI research hub in January. If anything, he was a little behind the times. Facebook's AI research team established its main hub in Paris almost three years ago with smaller teams based in Montreal, New York and Menlo Park, California).

"Because of all the talent here in Paris, this has been the place where we've been able to be the most successful in growing a major research hub," said Facebook CEO Mark Zuckerberg at VivaTech.

According to the company's French-born-and-bred chief AI scientist, Yann LeCun, there's one very specific reason that France has such bountiful AI talent: The strong grounding in mathematics that French children receive at school.

"The educational system is such that people have the right tools for this and the right mathematical background," said LeCun on stage at VivaTech. "There are many French people working in AI all over the world, including beyond Facebook."

That doesn't mean France is top of the heap, though. For now, China and the US remain the AI superpowers, said Schmidt on stage at the conference, with France in fourth position, hot on the heels of the UK.

"There's not that big a gap, because the French are very smart," said Schmidt. "There's a very big chance that France will be a significant global player."

In April the UK announced £1 billion of investment (about 1.1 billion euros or $1.3 billion) in in AI. But it had already been bested by France, which announced 1.5 billion euros (£1.3 billion or $1.8 billion) investment of its own in AI in March.

Silicon Valley's ménage à trois

It's not just in the field of AI where France is demonstrating strong potential to pull ahead of the UK. According to research agency Dealroom, Britain fell behind France for the first time in 2017 in terms of the amount of venture capital funding the country was pulling in following Brexit.

The UK, politically speaking, is a little tied up with its impending divorce from the European Union right now, and when it comes to tech this might be to its detriment. While Prime Minister Theresa May is wrangling with her own party and battling with the opposition to secure the best possible Brexit deal for Britain, Macron is mingling with CEOs and establishing France's place on the world stage.

The same CEOs will be notable by their absence at London's Tech Week, which kicks off in the British capital on Monday.

It's also not all about summits and about inviting people along to big gatherings though, said TechUK's Walker. The day-to-day of policy making and policy development that companies see happening in a country is also very important.

"The UK still has the potential to get its policy and regulatory approach to new technologies like AI and that will continue to attract the attention of the people making the big investments," he said. Silicon Valley recognizes that the UK is going through some big changes with Brexit.

That doesn't mean things are perfect either, Walker conceded. "I think the relationship could be improved and could be deepened."

Having a good relationship with Silicon Valley and good understanding what's at the heart of the companies driving the biggest changes is good sense for any country wanting in on the spoils. At the moment, the UK has work to do, especially when compared to France.

"I don't think it's all gloom and doom, but it definitely makes sense to pay attention to what happens around the world and make sure you're well plugged into the debate," said Walker. "Right at the moment the lead politician that's really trying to set the agenda is Macron, and that's clear and evident."

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