France is having an AI moment

Bonjour, it’s Mark reporting from Paris. The French tech community is wondering, is this their time? But first...Three things you need to kn [View in browser]( [Bloomberg]( [by Mark Bergen]( Bonjour, it’s Mark reporting from Paris. The French tech community is wondering, is this their time? But first... Three things you need to know today: • Zoom [cut about 150 jobs]( • Meta exceeded sales [forecast estimates]( • Okta will cut about [400 jobs]( Once upon a poolside A decade ago, Hugo Mercier struggled to find investors for his Dreem, a headband designed to improve sleep. Investors in his native France found it “too sci-fi.” Californians found it, well, too French. Mercier recalled one American’s concern: “‘You guys always go on strike.’” With his new company, Twin Labs, he’s had less trouble. It helps that he’s now working on generative artificial intelligence. Mercier told that story this week in Paris at an event focused on the city’s emerging AI industry, which is having a moment. Mistral AI, a French OpenAI rival formed less than a year ago, raced to a $2 billion [valuation]( by December. In another triumph for the local scene, California startup Poolside AI relocated to Paris last year after raising over $100 million in seed capital. Investors were buzzing this week about [Holistic](, the working name for an effort by former scientists at Google’s DeepMind. The meetup this week was organized by [StemAI](, a new business accelerator, and held at Station F, a startup incubator and co-working space inside a converted train depot. Earlier in the day, the campus convened a roundtable of eight AI startup founders. They were preoccupied with hiring. The influx of venture capital into the country has made recruiting from France’s pool of AI specialists harder, particularly for smaller companies. But Paul-Arthur Jonville said he managed to nab three recent PhDs for his cybersecurity startup Mindflow. “We raced to find them before anyone,” he said. Others said they took advantage of a government program that subsidized the salaries of doctoral students that went to work in tech, sometimes footing as much as 50% of the bill. Another one of the perks of France is that workers, even those versed in AI, are cheaper than their counterparts in California. “It’s a quarter of the cost,” said Paul Barbaste, co-founder of Inclusive Brains, a neuroscience startup. “And the French government is paying half.” Emmanuel Macron’s administration has been a vocal booster of AI. And Bpifrance, a state-backed fund, is a frequent tech investor, having financed both Mistral and Poolside. But Paris doesn’t have the strongest track record of supporting homegrown tech, and it’s distracted by [political headaches](. Nor is it alone in seeking an AI advantage. India, Japan and Canada are also talking about the importance of investing in “sovereign AI capabilities,” according to Nvidia Corp. Chief Executive Officer Jensen Huang, who said this week the trend will [fuel demand]( for his company’s chips. In a sign of its resilience, France was the European Union’s top startup market during a brutal 2023, with €9.3 billion ($10.1 billion) in VC deals, according to PitchBook. To be sure, that only amounted to 2.9% of global VC funding. Privately, French VCs point to a dearth of stock offerings and acquisitions in the local tech market — something the AI newcomers won’t likely solve anytime soon. One company that might have helped solve that is Hugging Face Inc., which runs a popular AI code repository and got its start at Station F. The company’s logo still occupies a spot on a wall inside the incubator, along with Google, Amazon and major French businesses. But if Hugging Face goes public, it probably won’t do it in Paris. Its French founders moved to the US. —[Mark Bergen](mailto:mbergen10@bloomberg.net) The big story Universal Music Group, the record label behind Drake, Ariana Grande and Taylor Swift, is [removing its music from TikTok]( after contract negotiations failed. The videos featuring UMG-owned tunes will be muted, and users will have the option to replace the song. One to watch [Watch the Bloomberg Technology TV interview]( with Qualcomm CEO Cristiano Amon. Get fully charged Amazon is adding an AI shopping companion named Rufus to its [retail store](. A hacking campaign with spyware sold by the Israeli company NSO Group targeted prominent lawyers, journalists and activists [tied to Jordan](. The activist investor Elliott built a 13% stake in Esty, an online [marketplace for crafts and other handmade goods](. Stellaris led a $6 million investment in a startup that operates a marketplace for [AI uses in radiology](. 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