Macron push to drop CIA code quickens as Trump calls EU foe

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(Bloomberg) -- Just weeks after Emmanuel Macron took office last year, his team went over the French state’s most sensitive activities. What it found provided a wake-up call.

The team learned that the country’s intelligence agency -- which, among other things, tracks French citizens for homegrown terrorism or anarchist activities -- uses software from a CIA-backed startup. Its code is provided by Palantir Technologies Inc., a data-mining company that started out working for the Pentagon and the Central Intelligence Agency.

The use of U.S. technology deep inside the French state isn’t unusual, but for the tech-savvy team of the 40-year-old president, it was a sign that the country needs to make technological independence a top priority -- a sentiment that’s become even more urgent after President Donald Trump called the European Union a “foe.”

“No French company was able to provide the work,” Laurent Nunez, the new chief of France’s domestic intelligence agency, told Bloomberg News in July on the sidelines of a conference to present a new anti-terrorism system. “Now we are working to foster a French or European offering. We’re looking toward an objective of launching a tool for all intelligence agencies. And many companies have stepped in.”

The push to find local solutions for mission-critical or sensitive operations is yet another departure from the assumption that the U.S. and its technology would remain a constant ally to Europe. As old alliances are questioned, France and Europe are turning to self reliance in technologies that may drive the economies of the future.

On Friday, the French Defense Minister Florence Parly will unveil in a speech at the National Space Agency in Toulouse her strategy to ensure France’s sovereignty in space with new technology-upgrade plans.

“We have a plan to lower our exposure to U.S. components,” Parly said at a news conference in Paris on Thursday. “We’ve had experiences that have led us down this path. I cannot give precise examples... We’ve had some difficulties. We know these difficulties are seemingly for strategic reasons but in reality they’re often because of competition. We’re not fooled. I don’t think I would offend anyone if I say that.” She has raised the issue with U.S. Secretary for Defense James Mattis on several occasions.

Macron’s push to make France more technologically independent is being overseen by intelligence veteran Pierre de Bousquet de Florian. In July, an armaments engineer, Thomas Courbe, was appointed to lead an agency to protect and bolster French companies.

A government adviser, Renaud Vedel, is tasked with compiling a list of software developers that can enhance counter-terrorism efforts, finding French or European face recognition, artificial intelligence and big data solutions. AI specialist Emmanuel Chiva was named head of a new military innovation body on Sept. 4.

Funding Support

The state is backing its intentions with funding. It has opened the credit taps, using a buckshot approach to find winners. Of the 57 billion-euro ($66 billion) investment program for modernizing France, 13 billion euros are being earmarked for funding innovation, with 4.6 billion euros for segments like artificial intelligence, big data and nanotechnologies. Also, the French army has injected an extra 100 million euros for military-tech research.

The European Union is also backing projects to make critical operations secure and less reliant on foreign technology. Under its Horizon 2020 plan currently underway, it’s backing R&D in industries from biotechnology to space with 80 billion euros over seven years. Macron is calling for money to be invested in fewer, targeted areas, with better coordination between European companies on technological priorities. Overcoming narrow national interests remains among the region’s toughest challenges.

Galileo Push

In one of its biggest industrial projects since Airbus in the 1970s, Europe is developing a global positioning system to stop relying on the U.S.’s GPS. Built by the U.S. Defense Department to help troops and ships navigate, the GPS network is now used widely. With Galileo, Europe is looking to avoid having to rely on the U.S.’s GPS, Russia’s GLONASS or China’s BeiDou, all of which could be disabled by their operators at any time.

In July, French Defense Minister Parly said regaining “autonomy” was “imperative” as she detailed a plan to modernize military equipment. She lamented that French “dependence on components is too high.”

Yet when a multi-year French defense ministry Microsoft contract was renewed last year, Parly defended the decision. “A kind of dependence is inevitable: the state doesn’t make and maintain all the software it uses,” Parly said. She vowed to evaluate using open-source software in the future.

Over the years, France has signed dozens of deals with U.S. companies like Raytheon and General Atomics for military projects. Elsewhere, Microsoft, IBM and Palantir are suppliers for managing databases or storing masses of information. As new technologies -- and with them new vulnerabilities and heaps of data -- become ubiquitous, perception is changing.

‘Weak Point’

“We must make sure the next technologies - in domotics, AI cars, in health, bio-research - are national or European,” Economy Minister Bruno Le Maire said in an interview in July. “Think of renewable energy storage. Will it be French and European, or Chinese or American? What’s key is to fund disruptive innovation since this is the weak point of French and European research.”

Years of pushing for homegrown technology companies and venture-capital investments may be starting to pay off. Some French startups have emerged as local rivals to U.S. giants, like cloud provider OVH Groupe SAS, which is trying to wrest market share from Amazon, or search engine Qwant, which is going up against Google by playing on privacy concerns.

France’s Economic and Social Council, a body that advises the National Assembly on new legislation, has made Qwant its default search provider. Based in Paris, Qwant says it doesn’t store information or track individuals. Still, it is tiny, with 2.6 billion requests a year, less than what Google typically handles in a day.

Fine Line

Government offices are switching to an instant messaging application developed by state engineers after concerns about services like Facebook’s WhatsApp and Telegram.

Still, old habits die hard. When the country’s state-backed railroad monopoly SNCF signed a juicy contract in July for its digital transformation, it turned to Amazon, Microsoft and IBM, drawing local criticism.

“Actually, there is a choice,” OVH Founder Octave Klaba tweeted.

Macron’s administration has to strike a delicate balance, Digital Minister Mounir Mahjoubi told Bloomberg News. If multilateral trade accords are questioned, France needs to adapt and reinvent local capabilities, he said, adding, however, that national preference all the way just isn’t an option.

“The easy solution would be to say ‘buy French’ and stop using foreign suppliers, but that would be going against globalization — our companies also sell abroad and we want to keep boosting exports,” Mahjoubi said. “It’s a fine line we’re walking.”

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