"There cannot be exclusive negotiations," a finance ministry source told AFP, confirming a report in the daily Le Monde.
"All options must be examined, taking into account concern for European sovereignty," he said.
PCCW, which is owned by Hong Kong tycoon Li Ka-shing's son Richard, had no comment when contacted by AFP.
French holding company Fimalac is preparing an offer for Dailymotion stake, a source who spoke on condition of anonymity said.
"The company was heading towards exclusive negotiations with PCCW but the talks were suspended for Fimalac to make an offer," the source said.
Le Monde had earlier reported Fimalac's interest in Orange's video platform, in which the state has a 24.9 percent stake.
The German groups Axel Springer and Bertelsmann have also been mentioned.
In 2013 France's then industrial renewal minister, Arnaud Montebourg, blocked a bid by Yahoo! of the United States to acquire Dailymotion, then valued at $300 million.
Orange CEO Stephane Richard said in mid-March that "simple negotiations" had opened with PCCW to take a 49 percent stake in Dailymotion and they were not exclusive.
Richard said PCCW, with activities in telecoms, media and other sectors, was a "powerful actor that could give us access to the Chinese market."
Li Ka-shing's Hutchison Whampoa bought British telecom giant O2 last month for $15.2 billion (14.1 billion euros), a move that expanded the tycoon's holdings in the international telecoms industry.
Hutchison already owns Britain's Three mobile phone network and if it merges with O2, Li would control the country's largest mobile company.