Trésor-Info - Publications de la direction générale du Trésor - Competition

The Artificial Intelligence Value Chain: What Economic Stakes and Role for France?

2024-12-05T00:00:00+01:00

Artificial intelligence (AI) refers to various techniques enabling machines to simulate human intelligence. The AI value chain is divided into three main segments (see Chart below): (i) the inputs required to develop AI systems and services (computing power, data, specialised workforce); (ii) modelling, which includes the development of general-purpose AI models (foundation models) and specialised models; and (iii) the deployment of such models to end-users.

Regarding AI system inputs, France has no major companies on par with the global leaders in the chip manufacturing and computing power rental markets. However, it benefits from a skilled workforce and a thriving innovation ecosystem.

As for AI model development, a few French companies are emerging, but the segment is dominated by the incumbent Big Tech firms established prior to the advent of AI technology. These incumbents enjoy vertical integration thanks to their preferential access to upstream inputs and downstream distribution channels for their AI solutions (e.g. office suite software). They have also partnered with emerging AI firms to integrate AI production processes horizontally.

The dominance of the AI market by a small number of large, already mature firms raises issues of economic efficiency, fair competition, and sovereignty, with the risk of limiting the economy-wide diffusion of AI-related added value and productivity gains.

The EU Single Market, a Driver for Economic and Trade Integration

2024-03-05T00:00:00+01:00

The single market plays a central role in European integration, and its purpose is to ensure the political stability and economic prosperity of its Member States. As of 2023, the market included 27 countries, 23 million businesses and nearly 450 million people, making it the world’s largest developed market. Within this market, economic and financial relations between Member States are very close (see Map on this page).

The EU single market has met its initial expectations, promoting innovation, boosting productivity and enabling convergence in the European Union (EU). The strengthened internal economic relations and economic convergence made possible by the single market have helped significantly raise incomes and the standards of living in EU Member States.

Between 1984 and 2019, EU economies’ goods export structures have become more similar, most likely reflecting the development of intra-industry trade. The single market has therefore not led to increased relative specialisation within the EU, where each Member State would have specialised in different sectors.

Competition in the French Electronic Communications Market

2023-01-17T00:00:00+01:00

Historically operated by public or private monopolies, electronic communications networks were gradually opened up to competition across Europe from the 1990s onwards. In order to coordinate this process and ensure that incumbent monopolies do not abuse their position to disadvantage new entrants, a regulatory framework was established in each European country. In France, the regulatory framework was expanded in the early 2010s to prepare for the rollout of new fibre optic networks so as to maintain the competitive dynamics in place.

As of 2022, four major fixed and mobile operators share the highly competitive French consumer electronic communications market. This intense competition is reflected in prices that are among the lowest in Europe. Furthermore, operators have been making significant investments (€14.9bn in 2021, excluding mobile licences) that have surged over the past few years, despite stable revenues (41% of turnover in 2021 versus 26% in 1998), due to the rollout of fibre optics in fixed networks. The investments made by these operators are some of the most robust on a European level.

Competition is not as intense in the business market, despite its essential role in ensuring the digitalisation and competitiveness of companies. In 2022, just one operator held a vast majority of the market share. One of the regulator’s priorities is to increase the competition of this market which is structurally slower to develop given major barriers to switching operators.

Opening telecoms networks up to competition has broadly been a success in France and Europe. This has not prevented incumbent European operators from maintaining a significant foothold in new networks: in late 2021, Orange retained over 56% of fibre optic fixed access deployments in France.