French Government Blocks Yahoo! Deal with Dailymotion

Arnaud Montebourg in Toulouse. Photo: Jackolan1 for Wikimedia Commons

Arnaud Montebourg in Toulouse. Photo: Jackolan1 for Wikimedia Commons

Arnaud Montebourg, French minister of industrial renewal, has blocked Yahoo! from buying a 75 percent stake in French video website Dailymotion. The move is a symbolic declaration of patriotism from the French government, who wants to protect one of France’s biggest start-up companies.

Montebourg told the Wall Street Journal that he would not let Dailymotion be owned primarily by an American company. “You don’t know what you’re doing,” he said. According to Montebourg, the French ministry wants to “make sure Dailymotion’s international development happens in the best possible conditions.”

Montebourg and his colleagues had said they would consider a deal, but only if it did not give Yahoo majority control. His block stopped a provisional deal worth 227 million euros (300 million dollars) that Telecom, Dailymotion’s owner, and Yahoo! had signed in April. Yahoo! has declined to comment on Montebourg’s refusal.

Dailymotion, a video-sharing platform similar to Youtube, was founded in 2005 by two French entrepreneurs. It is now Europe’s largest video-sharing network, with 2.5 billion videos viewed each month.

France’s move to assert control over the digital economy comes at a strategic point for the country, and Montebourg’s refusal to sell has been criticized by several French business leaders, who say that Montebourg is downgrading France in foreign investors’ eyes.

“Montebourg is sending a bad and wrong signal to international investors,” said Jean-David Chamboredon, president of ISAI, a fund that invests in French start-ups.

The deal would certainly have proven beneficial for both Dailymotion and Yahoo!, as the former needs Yahoo!’s financial prowess to compete with Youtube in the American sector. Yahoo!, on the other hand, would benefit from the positive publicity of the deal to reestablish their significance in the digital world, especially considering Google’s burgeoning power.

For now, Dailymotion remains on the market and will have to shoulder on without Yahoo!’s help for advertising revenue.

 

 

Trackbacks

  1. […] in the government was viewed as precarious by some after a disagreement over whether or not to sell Dailymotion to Yahoo!. Moscovici wanted the company to be sold for profit, while Productive Recovery Minister […]

  2. […] Pellerin, currently in the middle of reconciliation approaches with the Silicon Valley–after the French state blocked the acquisition of Dailymotion by Yahoo–declared, “we realize, maybe a little too late, that it would have been better to be less […]

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