U.S. Trade Representative Robert Lighthizer expressed concern that the tax, expected to be passed by the French Senate Thursday, July 4, 2019, "unfairly targets American companies".
Any digital company with a revenue of more than 750 million euros - of which at least 25m is made in France - would be subject to the tax.
The 301 investigation - the same type of probe that led the United States to slap tariffs on China past year - is a rare tool for Washington to use against a close ally, underscoring the Trump administration's intent to continue playing tough on trade. Prior investigations have covered Chinese trade practices and European Union subsidies on large commercial aircraft.
Jennifer McCloskey, vice president of policy at ITI, a U.S. tech-industry association said in a statement: "France's move to enact a unilateral, national digital tax opens the door to a fragmented, inefficient global tax system that would reduce business certainty and impede innovation, job creation, and economic growth worldwide. The structure of the proposed new tax as well as statements by officials suggest that France is unfairly targeting the tax at certain USA -based technology companies".More news: NSW 26 - 20 Queensland | 10 Jul 2019
The French Finance Ministry has estimated that the tax would raise about 500 million euros annually ($563 million) at first - but predicted that collections would rise "quickly".
While the so-called "GAFTA" law - named after Google, Amazon, Facebook and Apple - will target all global multinationals including from China, Germany, Spain and Britain, Washington is certain that the legislation was devised specifically against American firms.
The Internet Association trade group, which represents Google, Facebook, Amazon, Microsoft and other major tech companies, applauded the investigation.
"We support the USA government's efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of global cooperation and without using tariffs as a remedy", Jennifer McCloskey, ITI's vice president of policy, said in a statement.More news: Ekta's Balaji Telefilms apologises on Kangana's behalf
The administration also got some bipartisan support from the top members of the Senate Finance Committee.
Earlier, France said that it would start taxing giant USA targets digital companies with global annual sales of more than 750 million euros ($849 million) and sales in France of at least 25 million euros after European Union failed to agree on the bloc-wide digital tax.
"We recognise the challenges that arise as the global economy becomes increasingly digitised but proceeding unilaterally would complicate economic relationships around the world and lead to undesirable measures to address France's action", she said.More news: Seoul denies Japan claim of North Korea sanctions violations