France stops Yahoo investing in firm

THE FRENCH government has been accused of meddling too much in business after it derailed a plan for Yahoo! to take a majority stake in one of France's most successful online start-ups, the video-sharing website Dailymotion.

Industry minister Arnaud Montebourg stepped in to block the deal, imposing a 50% stake limit on the US web giant - which prompted Yahoo! to abandon talks and for the deal to collapse.

Montebourg reportedly said he did not want to see the French start-up "devoured" by Yahoo!

Dailymotion is one of the closest rivals to Google's YouTube and is a division of France Telecom. Other ministers defended the intervention, saying it was in the "public interest".

But France Telecom chief executive Stephane Richard said the state had no right to intervene - and it should be up to management and the board from both sides to manage the issue.

UMP vice-president Luc Chatel, a former minister, described the move as "economic protectionism". France Telecom is now looking for other potential partners to work with.