Why Europe Failed to Dominate Tech

• This episode examines the dominance of American tech companies and the scarcity of European ones in the digital landscape.
• Despite Europe's rich history in tech innovation, it now plays a limited role in consumer technology.
• Factors influencing this situation include regulations, funding challenges, and a brain drain of talent to the US.
• The EU is taking measures to improve its tech presence through initiatives like the European Chips Act and the Digital Markets Act.
• Ethical and regulatory leadership is a potential strength for Europe moving forward.

Hi, welcome to another episode of Cold Fusion. Here's a question: How do you measure who's really shaping the digital world? One way to look at it is where people spend their time online. Here’s a list of the 20 most visited websites in the world. You’ll notice, aside from these two, Yandex from Russia and Naia from South Korea, nearly all of them are American.

But do you notice something else? There isn't a single European company on this list. When you really think about it, these American companies are a part of everyday life. Maybe you use Google to search for things, or Google Maps to get around. FaceTime, or WhatsApp to message a friend. Or you might scroll through Instagram or TikTok while waiting for your Amazon delivery.

Basically, you're interacting with a world created almost entirely outside of Europe. It isn’t that surprising though. How many consumer facing European tech companies can you name off the top of your head? Not many, I’d guess. But the thing is, it wasn't always like this.

Europeans largely led the tech world before Silicon Valley; before the Mark Zuckerbergs and Jeff Bezos. There were Nokia, Siemens, and Erickson. Not to mention early pioneers like Alan Turing, Conrad Zeus, and Tim Berners-Lee, who all, by no exaggeration, laid the groundwork for modern computing and the Internet itself. But things have clearly changed now. Europe no longer sits at the table.

It's not just one country that we're talking about here. It's the whole continent, with 27 nations and 450 million people in it. It's also home to some of the world’s best universities and has a rich history of scientific breakthroughs. Yet the European Union has not produced a single global tech company on the scale of Apple, Google, Microsoft, or Tencent. Why is that?

How did a continent that helped shape the modern world fall behind in the digital world? But that's not to say the EU is doing nothing. The EU is still managing to shape the tech world.

Before we start, I just want to say thanks for all the love on the Spotify. You guys are awesome. For those who haven't, feel free to check out Cold Fusion on Spotify.

What are some signs that a society or region is doing well? Not just economically, but more broadly. You can look at industrial strength, education quality, or how well people live. Some of these are easy to quantify. Others, though, are more subtle, like how open or forward thinking a society is.

By most of those measures, Europe is doing more than fine. In fact, in many areas, that’s leading. So when we say Europe is falling behind, we're only talking about a specific sector: consumer technology. Because Europe ticks almost every box that should make it a tech powerhouse.

For instance, it has a history of industrial precision and world-class engineering. Legacy industries like automotive, aerospace, and rail are still world-class, of course. Germany’s BMW, Mercedes, and Volkswagen compete directly with Airbus, which competes with Boeing, who I don't have to tell you, has their own issues.

Europe has cross-border high-speed rail, and although green energy is sometimes frowned upon by some parts of Europe, they’re actually doing it very well. Nearly 24% of its electricity now comes from renewables, with Denmark topping the charts.

So it’s really unfair to say that Europe isn’t doing anything impactful. Looking beyond industry, its education is elite. Europe hosts some of the world's best universities: Oxford, Cambridge, ETH Zurich, the Sorbonne, and TU Munich. These schools consistently produce top-tier talent.

Of course, though many of those great minds leave for the United States. In the US, the funding is higher and the startup culture is more aggressive. This is part of a broader brain drain, which we will touch on later. But for those who stay in Europe, the EU invests heavily in its own potential.

In 2023 alone, EU countries spent 381.4 billion Euros on R&D. And that’s not just theory. Look at CERN in Geneva, the birthplace of the World Wide Web. Or the world’s most powerful particle accelerator. Or ITER in southern France, where scientists are chasing nuclear fusion. These are serious global-scale science projects, and they’re happening in Europe.

Sure, there are political and social tensions, economic challenges, and rising crime in some areas, but that's a lot of places today. But the point stands that the quality of life remains high in comparison to many other places in the world. Healthcare is usually universal. Public transport works. Cities are designed for people, not just cars.

Four of the world’s ten most livable cities are in Europe as of 2024. Add to that democratic values and the world's strongest data privacy laws, and you'd think, man, this is perfect. It’s the absolute perfect setup. The brains, the money, the infrastructure. And yet, when it comes to consumer tech, it’s a ghost town.

Yes, there are bright spots. Sweden gave us Spotify and Germany’s SAP powers enterprise software around the world. And of course, the Dutch firm ASML is arguably the most important tech company that you've never heard of. They build the machines that build the chips that power everything. We’re talking everyone from Apple, Nvidia, to the data centers that power AI.

Every consumer piece of technology that has a chip in it would likely not be possible without this Dutch company. But there are caveats. Spotify is barely profitable and doesn’t hold a candle to those American juggernauts. SAP is huge, but it’s B2B and most people wouldn’t even recognize the logo. ASML may be essential for the world, but it’s not consumer-facing either.

So there are successful tech companies, but in the context of the tech world, Europe is far from the behemoth. If we look across the globe, US consumer tech companies are just different. Apple, Google, Microsoft, Meta, Amazon—these brands are well known. They’re massive. Honestly, calling them massive is an understatement because each of these are trillion-dollar-plus companies.

Seven of these US companies, as you can see on the screen, reached a combined market cap of 13 trillion dollars in 2024. In contrast, Europe’s top 11, including SAP, ASML, and Spotify, amounted to 2.2 trillion dollars. That’s less than 17% of those US companies mentioned. And what's even more striking is the value of these seven US companies. The 13 trillion is nearly equal to the GDP of Germany, the UK, France, and Italy combined. That’s just bonkers.

Let’s just forget about the US for a second. The rise of Asian nations, mainly China, South Korea, and Japan, is actually more concerning for Europe. These three Asian countries were always at the forefront of building incredible companies. Japan gave us iconic brands like Sony, Panasonic, and Nintendo. South Korea has LG and Samsung, and China, well, in just the past few decades alone they’ve produced BYD, Tencent, Alibaba, Huawei, and ByteDance, just to name a few.

That’s where the contrast with Europe really stands out the most. Aside from the few names we’ve mentioned, there are hardly any recognizable European tech brands. Yet just a few moments ago we looked at how the continent has all the right ingredients.

So the question is, why hasn’t the EU cracked the code of consumer tech based companies? What happened to Europe? Europe has 200 million more people than the United States. Why do we not have any technologies that Europeans develop that we need to use today to get through our life in the United States?

What happened to Europe’s inventions? Listen, I think there are two reasons, and from my personal experience: I moved to the US when I was 16, and I never came back. I recently also became an American citizen. One thing that I've noticed is some of the best European entrepreneurs leave to start their companies in the US.

So, there are very famous companies like Snowflake, but they were started actually by three French people, and yet it’s an American company. So I think problem number one is the US is such an amazing country that a lot of people decide to start their companies there.

Problem number two is if I’m in the US and I start the company, I get money from people who are willing to lose it, understanding the risk, and I can probably get a term sheet in a matter of weeks. Oh, if I try to raise money in Europe, good luck!

After that, I’m in one country and then I need to have a different set of regulations that I need to respect in the big six countries. Then there are, I don’t know, 30 or 40 countries in the European Union, each with their own regulation. I’d rather start my company in the US and then move very quickly to Canada, the UK, and Australia. Then from the UK, I move to continental Europe.

That’s what we see. The man you just heard is Philipe Lafont, a billionaire hedge fund manager. He moved to the US and made his fortunes with his firm by betting rich on tech companies. What he just said are some problems that Europe is facing, but we can dig a little deeper.

Let’s start with the borders. The European Union is a political and economic union, yes, but it’s not a single market the same way the US is. Every startup in Europe has to deal with 27 different regulatory systems, 24 official languages, and a patchwork of tax, labor, and data laws, according to Daniel Arrimark, CFO at Dutch headquartered hospitality software Muse.

The broader challenge is that Europe, despite its economic size, still operates as a collection of individual countries rather than a unified market in the same way the US does. This makes it harder to build companies at scale.

One striking example is the early days of Uber in Europe. The app was first launched in Paris in 2011, but when the company tried to expand throughout Europe, it hit a brick wall. Hungary and Bulgaria outright banned the app in places like Germany, France, Italy, and the Netherlands. Key early Uber services were blocked because they allowed unlicensed drivers to pick up passengers. Regulators and the local taxi union didn't like that.

So the backlash was fierce. Protests escalated into chaos, streets were blocked, cars were burned, and the situation got out of hand. Eventually, the European Court of Justice ruled that countries could ban the app without needing approval from the EU. In the end, this became a textbook example of how fragmented regulations can cause roadblocks for tech companies.

There's a saying that’s going around online: "America innovates and the EU regulates." While this is true, glance regulation isn’t inherently bad. In fact, Europe has a history of holding the tech giants accountable. The EU’s GDPR or General Data Protection Regulation set a global benchmark for data privacy. These rules were thoughtful, necessary and, in many cases, ahead of their time.

In 2023, Meta was fined 1.2 billion euros for transferring European Facebook users' data to the US without adequate protection. This is the largest fine under GDPR rules, and of course, this next one affects hundreds of millions of people. The EU forced Apple to adopt the USB-C standard, a move that surprised many because Apple is extremely stubborn.

However, there’s a massive problem with the European setup. The very same regulations that protect consumers also impose massive compliance costs that smaller startups can’t afford. You could argue that these rules protect society, but at the same time, they’ve also unintentionally raised the bar for entry.

Basically, there’s a lot of rules and regulations, and the EU is cautious; by proxy, so are European investors. They’re much less likely to take chances on bold, unproven ideas. Hampas Jacobson, a Swedish entrepreneur and the founder of the VC firm Pale Blue Dot, puts it this way to TechCrunch: "I feel that few have the guts and are as visionary as US VCs. I think it's due to the fact that most EU VCs are not entrepreneurs but pure corporate finance bread boys or wine and dine talkers. So they don’t understand risk and how to work with entrepreneurs. European VCs should recruit seasoned entrepreneurs."

There are some exceptions, but oh boy, there are few. His words are blunt but hit the nail on the head. European VCs tend to focus more on safer bets such as B2B software, finance, or health tech. It explains why Europe’s best companies like SAP and ASML are enterprise-focused and not consumer-facing.

You can see this pattern in the kind of ventures that pop up. In 2025, there are approximately 35,000 EU startups, and the majority of them are focused on AI, fintech, and sustainability. It’s not necessarily a bad thing, but it leaves a massive gap for the consumer tech sector.

In Silicon Valley, it’s a different story. It’s high risk, high reward. It’s the kind of environment where failure is almost seen as a badge of honor. Here’s Sundar Pichai, Google CEO, on the matter: "Starting up a company and even having failed, you can wear it like a badge of honor, right? And, and I think that's important, you know, culturally, you know, risk is rewarded."

I remember when I started working at Google, you know, if I went and, you know, people who are discussing ideas, the other people who heard the ideas try to build on those ideas, they encourage you. So it's a culture of optimism, it’s a culture of risk-taking, and I think that’s really important.

In contrast, the EU is very cautious, and the numbers show it. A 2020 report showed that European startups get 54% less funding than their US counterparts as they mature. The report also highlights that just 0.5% of them managed to scale at all. And it's not for a lack of ambition. European founders are innovative, but the money just isn't following the ideas.

In 2024, American and Canadian startups brought in over 184 billion dollars. That’s almost three times more than the whole of the EU. When you look at venture capital versus GDP, the disparity is clear. In the last decade, the US averaged 0.7% of GDP in VC funding. That's about 350% more than the EU at 0.2%.

So it’s clear here: less funding and more caution. When you put all of these factors together, you start to see why so many brilliant European engineers are leaving the continent. This is the broader brain-drain issue that I mentioned earlier. Over the past decade, the percentage of EU science graduates staying overseas jumped from 49% to 73%. That’s massive.

This kind of brain drain causes a talent shortage. In fact, according to the previous report, 63% of high-growth startups in Europe want to hire more skilled workers. But nearly a third can’t find the right people. The applicants often lack the experience, skill set, or the mindset to succeed. In short, there are not enough experts, and the people that you need to build global consumer-facing tech just aren’t enough in the EU.

It’s a tough position to be in, but it’s not game over yet. Europe may have missed the first wave of the digital revolution in the 21st century. It didn’t invent the iPhone, the search engine, or the attention economy. So what now for them?

Some say that Europe should not try to clone Silicon Valley. Instead, they should do something more European. So what does this look like? Well, in 2022, they launched the European Chips Act. It was a 43 billion Euro investment to boost semiconductor production and reduce dependence on the US and Asian suppliers. Right now, over 90% of the world’s most advanced chips come from Taiwan. So Europe is playing the long game by investing in its own chip manufacturing.

But it's definitely not easy. Even American giants like Intel are struggling to compete making their own chips without the help of Taiwan. So we’ll keep an eye on how Europe goes with this venture. On the regulatory front, they launched the Digital Markets Act in 2023. This act targets the so-called gatekeeper platforms like Google, Apple, and Meta.

The goal is to force them to open up their platforms and stop favoring their own products and search results. Perhaps the EU is slowly recognizing that while it may not have the tech giants, it does have something else: the power to set global norms. Columbia law professor Au Branfard calls this the Brussels effect, named after the EU’s political capital, Brussels.

It refers to how European regulations often end up becoming the default standard worldwide purely because of their influence. Like it or not, it’s easier than building different products or services for different regions. In short, Europe may not control the platforms, but it can control the rules.

The European Union has ordered Apple and Facebook parent Meta to pay combined fines of 700 million euros, the first punitive acts taken under the Digital Markets Act, legislation that’s designed to curb the power of big tech. These measures have nothing to do with trade policy. It’s European law. And European law has to be enforced.

Whatever American government there is, whatever other governments may think about it, it’s in the interest of open markets. From these open markets, American companies will flourish and will enjoy the benefits of it. A great example of the EU’s regulatory reach is playing out right now with artificial intelligence.

In 2024, they passed the AI Act, the world’s first comprehensive artificial intelligence law. It sets strict requirements for safety, transparency, and accountability. Once again, the EU is betting that companies will adopt its rules. But whether this benefits users or just turns out to be another regulatory drag remains to be seen.

But among all of this, there’s some real genuine innovation. For example, Estonia, a tiny Baltic country, had made all of its government services 100% digitized as of 2024. Now citizens can vote online, pay taxes in minutes, and even start a business from abroad.

Meanwhile, France has quietly built the third largest startup ecosystem in Europe. Backed by state funding, digital health platforms are growing in numbers. Startups like Doctolib and Alan are reshaping how people access healthcare. Another app, Monospace Sana, built a national platform to securely store and share medical records.

Whatever the state of things right now, we can’t deny Europe’s influence in the 18th and 19th centuries. They led the world through the Industrial Revolution. In the 20th century, they rebuilt from two bloody wars and helped define modern democracy and prosperity.

But they face a new challenge now. So the question is, in a world defined by technology, is it enough to simply just regulate the future or must you build it too? Let us know what you think. Would you like to see the EU have more of a presence in the consumer-facing tech world? Or should America and Asia still take the number one spot? Leave your thoughts in the comments section below.

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So my name is Degogo, and you’ve been watching Cold Fusion, and I’ll catch you again soon for the next episode. Cheers, guys. Have a good one.