• Europe is pursuing AI innovation, tech regulation and competition with China differently than the United States, French President Emmanuel Macron says.
• "It's insane to have a world where the big giants just come from China and the U.S," Macron told CNBC's Andrew Ross Sorkin in an exclusive interview.
• Technology leaders descended on Paris this week for the VivaTech innovation conference.

PARIS, France — Europe is pursuing AI innovation, tech regulation and competition with China in very different ways than the United States, French President Emmanuel Macron said this week, as the continent seeks to become the third major global tech force in what is now a U.S.-China dominated landscape.

"It's insane to have a world where the big giants just come from China and the U.S," Macron told CNBC's Andrew Ross Sorkin in an exclusive interview Tuesday in Paris.

"We need much more European big players, and I think Mistral AI can be one of them," Macron said of France's leading AI company. Microsoft recently invested 15 million euros ($16.3 million) into Mistral.

Macron also praised H, the newly launched French AI startup that announced this week it had raised a massive $220 million from its initial round of financing.

"I think it's even good for the U.S. ecosystem to have a very vivid, vibrant and ambitious European ecosystem," he said.

Macron spoke to CNBC as technology leaders descended on Paris for the VivaTech conference. On Tuesday, the Elysee Palace hosted a group of business leaders and engineers in AI, on the eve of the event.

The meetings came on the heels of a wave of new private investments in the country, led by a commitment from Microsoft of 4 billion euros, its largest ever to France.

"The more that AI companies decide to locate in Europe, he said, "the more the European governments will be in the same situation as the U.S. and the Chinese governments."

"Our challenge for AI is accelerate, innovate and invest, and on the other side, regulating at the appropriate scale," he added.

The European Union is ahead of the United States in regulating artificial intelligence, having passed the first major set of regulatory rules in March with the EU Artificial Intelligence Act. 

Macron also defended the strict European Union online privacy regulations, and he rejected the widely held view in Washington that Brussels is deliberately trying to undermine the dominant positions of U.S. tech giants like Google and Meta through a kind of competition-by-regulation strategy.

"I think it's wrong," said Macron. "If I want to provide a guarantee on your privacy, storage of your data, the view of your cloud, this is a sovereign and very important democratic issue."

He compared allowing American tech giants to operate under U.S. regulations while in Europe, to allowing a French bank in the United States to ignore American banking regulations.

"The point is, I don't regulate you when you're operating in the U.S. But just be sure that when you operate in the European continent, you have to respect European rules."

When it comes to China, however, Macron implied that he thought some U.S. tech regulations had gone too far.

He said France, for example, does not see a significant national security threat arising from TikTok, the massive social media app owned by China-based ByteDance.

Under a U.S. law recently passed in the name of national security, ByteDance will be required to divest TikTok in order to continue operating on American devices.

"We didn't use this approach, and we are neutral in terms of technology, nationality, and players," said Macron.

"Look, I think China is a competitor when you speak about trade, innovation and economy. I think the pity is that we should work much more collectively in order to push them to be compliant with international rules, instead of deciding ourselves not to respect international rules ourselves," he said.

"They compete and they are quite good in terms of creating innovations and producing," he said. "We were too naive till now, and today Europe is less productive to its economies [than] the U.S."