Laurence Engel, la Médiatrice du livre (the Mediator of Books, kind of a leagal ombudsman for France's book pricing laws), has released a legal opinion which says that Kindle Unlimited is not legal under French law. This opinion also applies to KU's local competitors Izneo, Youboox, and Youscribe, and effectively requires them to reevaluate how they operate.
Kindle Unlimited launched in France in early December 2014 with 20,000 French language titles out of a catalog of around 700,000 titles (now 830,000 plus titles). Its competitors had been operating for years, but the launch of KU brought the subscription ebook model to the attention of Fleur Pellerin, the French Minster of Culture. She proclaimed that it was illegal, and sought a legal opinion from Engels.
According to Le Figaro, KU in particular is illegal because it violates the French laws which require that publishers set the retail prices for their books.
To be clear, the subscription model itself is not illegal; a publisher could launch a service with just their own titles and pass legal muster. Another possible example would be a service which sold credits which could be applied to read ebooks in a catalog, or a service which let readers pay to subscribe to specific publishers (similar to premium cable channels).
Following the release of the legal opinion, the various operators will have a month to discuss the legal issues with the mediator of books, and 3 months to bring their services in compliance with French law.
Curiously, Pellerin told Le Figaro that self-published ebooks as well as books by foreign publishers would not be affected by this opinion, just books published by French publishers.
Given that KU draws upon primarily non-French sources, that would give Amazon an advantage. The point concerning self-published books, however, adds a complication.
While we may say that the majority of ebooks in KU are self-published, that's not completely accurate. The ebooks are drawn from KDP, Amazon's ebook distribution portal, but since that platform is used by both publishers and the self-published it is a little hard to distinguish between the two groups.