0:00 [Music]
0:02 Hi, welcome to another episode of Cold
0:05 Fusion. Here's a question. How do you
0:07 measure who's really shaping the digital
0:09 world? One way to look at it is where
0:12 people spend their time online. Here's a
0:14 list of the 20 most visited websites in
0:16 the world. You'll notice aside from
0:18 these two, Yandex from Russia and NA
0:20 from South Korea, nearly all of them are
0:22 American. But do you notice something
0:25 else? There isn't a single European
0:27 company on this list. But when you
0:29 really think about it, these companies
0:31 are a part of everyday life. Maybe you
0:33 use Google to search for things or
0:35 Google Maps to get around. FaceTime or
0:37 WhatsApp to message a friend. Or you
0:39 might scroll through Instagram or Tik
0:40 Tok while waiting for your Amazon
0:43 delivery. Basically, you're interacting
0:45 with a world created almost entirely
0:47 outside of Europe. It isn't that
0:48 surprising, though. How many
0:50 consumer-facing European tech companies
0:52 can you name off the top of your head?
0:55 Not many, I'd guess. But the thing is it
0:58 wasn't always like this. Europeans
0:59 largely led the tech world before
1:02 Silicon Valley. Before the Mark
1:03 Zuckerbergs and Jeff Bezos, there was
1:06 Nokia, Seammens, and Ericson. Not to
1:09 mention early pioneers like Alan Turing,
1:11 Conrad Zeus, and Tim Bernest Lee, who
1:13 all by no exaggeration laid the
1:15 groundwork for modern computing and the
1:17 internet itself. But things have clearly
1:20 changed now. Europe no longer sits at
1:23 the table. It's not just one country
1:24 that we're talking about here. It's the
1:27 whole continent with 27 nations and 450
1:30 million people in it. It's also home to
1:31 some of the world's best universities
1:33 and has a rich history of scientific
1:36 breakthroughs. Yet, the European Union
1:38 has not produced a single global tech
1:41 company on the scale of Apple, Google,
1:44 Microsoft, or Tencent. Why is that? How
1:46 did a continent that helped shape the
1:48 modern world fall behind in the digital
1:50 world? But that's not to say the EU is
1:52 doing nothing. The EU is still managing
1:54 to shape the tech world. Let's take a look.
1:56 look. [Music]
1:58 [Music]
2:01 You are watching Fusion TV. [Music]
2:04 [Music]
2:05 Before we start, I just want to say
2:07 thanks for all the love on the Spotify.
2:09 You guys are awesome. For those who
2:10 haven't, feel free to check out Cold
2:16 Spotify. What are some signs that a
2:18 society or region is doing well? Not
2:20 just economically but more broadly. You
2:22 can look at industrial strength,
2:24 education quality or how well people
2:26 live. Some of these are easy to
2:29 quantify. Others though are more subtle
2:31 like how open or forwardthinking a
2:34 society is. By most of those measures,
2:37 Europe is doing more than fine. In fact,
2:40 in many areas, it's leading. So when we
2:42 say Europe is falling behind, we're only
2:44 talking about a specific sector,
2:46 consumer technology. Because Europe
2:48 ticks almost every box that should make
2:51 it a tech powerhouse. For instance, it
2:53 has a history of industrial precision
2:55 and worldclass engineering. Legacy
2:57 industries like automotive, aerospace,
3:00 and rail are still world class. Of
3:03 course, Germany's BMW, Mercedes, and
3:06 Volkswagen. France's Airbus competes
3:07 directly with Boeing, who I don't have
3:09 to tell you has their own issues. Europe
3:11 has crossber highspeed rail. And
3:13 although green energy is sometimes
3:15 frowned upon by some, parts of Europe
3:17 are actually doing it very well, nearly
3:19 24% of its electricity now comes from
3:21 renewables with Denmark topping the
3:24 charts. So it's really unfair to say
3:26 that Europe isn't doing anything
3:28 impactful. Looking beyond industry, its
3:31 education is elite. Europe hosts some of
3:33 the world's best universities. Oxford,
3:37 Cambridge, ETH Zurich, the Sorborn, and
3:40 TU Munich. These schools consistently
3:42 produce top tier talent. Of course,
3:44 though, many of those great minds leave
3:47 towards the United States. In the US,
3:49 the funding is higher and the startup
3:51 culture is more aggressive. This is part
3:52 of a broader brain drain, which we'll
3:55 touch on later. But for those who stay
3:57 in Europe, Europe actually invests
4:00 heavily in its own potential. In 2023
4:03 alone, EU countries spent €381.4 billion
4:07 on R&D. And that's not just theory. Look
4:09 at CERN in Geneva. the birthplace of the
4:10 worldwide web or the world's most
4:13 powerful particle accelerator or the ITR
4:15 in southern France where scientists are
4:18 chasing nuclear fusion. These are
4:20 serious global scale science projects
4:23 and they're happening in Europe. Sure,
4:25 in Europe there's political and social
4:27 tensions, economic challenges and rising
4:30 crime in some areas, but that's a lot of
4:32 places today. But the point stands that
4:34 the quality of life remains high in
4:36 comparison to many other places in the
4:39 world. Healthcare is usually universal.
4:41 Public transport works. Cities are
4:44 designed for people, not just cars. And
4:45 four of the world's 10 most livable
4:47 cities are in Europe as of
4:50 2024. Add to that democratic values. And
4:53 the world's strongest data privacy laws,
4:55 and you'd think, man, this is perfect.
4:57 It's the absolute perfect setup. The
5:00 brains, the money, the
5:02 infrastructure. And yet, when it comes
5:05 to consumer tech, it's a ghost town.
5:08 Yes, there are bright spots. Sweden gave
5:10 us Spotify. And Germany's SAP powers
5:13 enterprise software around the world.
5:15 And of course, the Dutch firm ASML is
5:18 arguably the most important tech company
5:20 that you've never heard of. They build
5:22 the machines that build the chips that
5:24 power everything. We're talking everyone
5:27 from Apple, Nvidia, the data centers
5:29 that power AI, every consumer piece of
5:31 technology that has a chip in it would
5:33 likely not be possible without this
5:36 Dutch company. But there are caveats.
5:38 Spotify is barely profitable and doesn't
5:40 hold a candle to those American
5:43 juggernauts. SAP is huge, but it's B2B
5:45 and most people wouldn't even recognize
5:48 the logo. ASML may be essential for the
5:50 world, but it's not consumerf facing
5:53 either. So there are successful tech
5:54 companies, but in the context of the
5:58 tech world, Europe is far from the
6:01 beeroth. If we look across the globe, US
6:03 consumer tech companies are just
6:06 different. Apple, Google, Microsoft,
6:09 Meta, Amazon, these brands are
6:12 wellknown. They're massive. Honestly,
6:13 calling them massive is an
6:15 understatement because each of these are
6:18 trillion dollar plus companies. Seven of
6:20 these US companies, as you can see on
6:21 the screen, reached a combined market
6:26 cap of 13 trillion in 2024. In contrast,
6:29 Europe's top 11, including SAP, ASML,
6:32 and Spotify, amounted to 2.2 trillion.
6:34 That's less than 17% of those US
6:36 companies mentioned. And what's even
6:37 more striking is the value of these
6:40 seven US companies, the 13 trillion, is
6:42 nearly equal to the GDP of Germany, the
6:46 UK, France, and Italy combined. That's just
6:47 just
6:49 bonkers. Let's just forget about the US
6:52 for a second. The rise of Asian nations,
6:55 mainly China, South Korea, and Japan, is
6:57 actually more concerning for
7:00 Europe. These three Asian countries were
7:01 always at the forefront of building
7:03 incredible companies. Japan gave us
7:05 iconic brands like Sony, Panasonic, and
7:08 Nintendo. South Korea has LG and
7:10 Samsung. And China, well, in just the
7:12 past few decades alone, they've produced
7:16 BYD, Tencent, Alibaba, Huawei, and Bite
7:19 Dance, just to name a few. That's where
7:21 the contrast with Europe really stands
7:24 out the most. Aside from the few names
7:25 we've mentioned, there are hardly any
7:28 recognizable European tech brands. Yet,
7:29 just a few moments ago, we looked at how
7:31 the continent has all the right
7:33 ingredients. So, the question is, why
7:35 hasn't the EU cracked the code of consumer
7:41 [Music]
7:43 tech based companies? What happened to
7:45 Europe? Europe has 200 million more
7:47 people than United States. Why do we not
7:49 have any technologies that Europeans
7:51 developed that we need to use today to
7:52 get through our life in United States?
7:54 What happened to Europe's uh
7:56 inhabitedness? Listen, I think there's
7:58 two reasons and from my personal experience
8:00 experience
8:03 um I moved to the US when I was 16 and I
8:05 never came back and recently also became
8:07 an American citizen. One thing that I've
8:10 noticed is some of the best European
8:12 entrepreneurs, they leave to start their
8:14 companies in the US. So there's some
8:16 very famous companies like Snowflake,
8:18 but they were started actually by three
8:20 French people, but it's an American
8:22 company. So I think problem number one
8:24 is the US is such an amazing country
8:26 that a lot of people decide to start
8:28 their companies in the US. Problem
8:31 number two is if I'm in the US and I
8:33 start the company, I get money from
8:35 people who are willing to lose it,
8:37 understand the risk, and I can probably
8:39 get a term sheet in a matter of weeks.
8:41 Oh, if I try to raise money in Europe,
8:43 good luck. And then after that I'm in
8:47 one country and then I need to have a
8:49 different set of regulation that I need
8:52 to respect to be in the big six. And
8:53 then there's I don't know 30 or 40
8:55 countries in the European Union each
8:57 with their own regulation. I rather
9:00 start my country in the US uh start my
9:02 company in the US then you move very
9:04 quickly to Canada, UK and Australia and
9:07 then from the UK you move to continental
9:10 Europe. That's what we see. The man you
9:12 just heard is Philipe Lefont, a
9:14 billionaire hedge fund manager. He moved
9:16 to the US and made his fortunes with his
9:19 firm by betting rich on tech companies.
9:21 What he just said are some problems that
9:23 Europe is facing. But we can dig a
9:25 little deeper. Let's start with the
9:27 borders. The European Union is a
9:30 political and economic union, yes, but
9:32 it's not a single market the same way
9:35 the US is. Every startup in Europe has
9:37 to deal with 27 different regulatory
9:40 systems, 24 official languages, and a
9:43 patchwork of tax, labor, and data
9:46 laws. According to Daniel Armar, CFO at
9:48 Dutch Headquartered Hospitality
9:51 Software, Muse, the broader challenge is
9:53 that Europe, despite its economic size,
9:54 still operates as a collection of
9:56 individual countries rather than a
9:58 unified market in the same way the US
10:00 does. This makes it harder to build
10:03 companies at scale. End quote. One
10:05 striking example is the early days of
10:07 Uber in Europe. The app was first
10:09 launched in Paris in 2011, but when the
10:11 company tried to expand throughout
10:13 Europe, it hit a brick wall. Hungary,
10:16 and Bulgaria outright banned the app in
10:19 places like Germany, France, Italy, and
10:21 the Netherlands. Key early Uber services
10:23 were blocked because they allowed
10:24 unlicensed drivers to pick up
10:26 passengers. Regulators, and the local
10:28 taxi union didn't like that, so the
10:31 backlash was fierce. Protests escalated
10:34 into chaos. Streets were blocked, cars
10:36 were burned, and the situation got out
10:39 of hand. Eventually, the European Court
10:40 of Justice ruled that countries could
10:42 ban the app without needing approval
10:45 from the EU. In the end, this became a
10:47 textbook example of how fragmented
10:49 regulations can cause roadblocks for tech
10:51 tech
10:53 companies. There's a saying that's going
10:56 around online, America innovates and the
10:59 EU regulates. While this is true at a
11:02 glance, regulation isn't inherently bad.
11:04 In fact, Europe has a history of holding
11:07 the tech giants accountable. The EU's
11:09 GDPR, or General Data Protection
11:11 Regulation, set a global benchmark for
11:13 data privacy. These rules were
11:16 thoughtful, necessary, and in many cases
11:20 ahead of their time. In 2023, Meta was
11:23 fined€1.2 2 billion for transferring
11:26 European Facebook users data to the US
11:28 without adequate protection. This is the
11:31 largest fine under GDPR
11:33 rule. And of course, this next one
11:35 affects hundreds of millions of people.
11:38 The EU forced Apple to adopt the USBC
11:40 standard, a move that surprised many
11:42 because Apple is extremely
11:44 stubborn. However, there's a massive
11:46 problem with the European setup. The
11:48 very same regulations that protect
11:51 consumers also impose massive compliance
11:53 costs that smaller startups can't
11:55 afford. You could argue that these rules
11:58 protect society, but at the same time,
11:59 they've also unintentionally raised the
12:02 bar for entry. Basically, there's a lot
12:04 of rules and regulations, and the EU is
12:08 cautious. And by proxy, so are European
12:10 investors. They're much less likely to
12:13 take chances on bold, unproven ideas.
12:16 Hampus Jacobson, a Swedish entrepreneur
12:18 and the founder of the VC firm Pale Blue
12:21 Dot, puts it this way to TechCrunch.
12:23 Quote, "I feel that few have the guts
12:26 and are as visionary as US VCs. I think
12:29 it's due to the fact that most EU VCs
12:31 are not entrepreneurs, but pure
12:33 corporate finance bread boys or wine and
12:35 dine talkers. So, they don't understand
12:38 risk and how to work with entrepreneurs.
12:40 European VCs should recruit seasoned
12:42 entrepreneurs. There are some
12:45 exceptions, but Lord, there's a few."
12:47 End quote. His words are blunt, but hit
12:50 the nail on the head. European VCs tend
12:52 to focus more on safer bets such as B2B
12:56 software, finance, or health tech. It
12:58 explains why Europe's best companies
13:00 like SAP and ASML are enterprise focused
13:03 and not consumerf facing. You can see
13:05 this pattern in the kind of ventures
13:07 that pop up. In 2025, there's
13:10 approximately 35,000 EU startups, and
13:12 the majority of them are focused on AI,
13:15 fintech, and sustainability. It's not
13:17 necessarily a bad thing, but it leaves a
13:19 massive gap for the consumer tech
13:21 sector. In Silicon Valley, it's a
13:23 different story. It's high risk, high
13:25 reward. It's the kind of environment
13:27 where failure is almost seen as a badge
13:30 of honor. Here's Sundar Pachai, Google
13:32 CEO, on the matter. Yeah. Starting up a
13:33 company and even having failed, you
13:34 know, you can wear it like a badge of
13:37 honor, right? And uh I think that's
13:39 important you know culturally you know
13:41 risk is rewarded. I remember when I
13:43 started working at Google you know I if
13:45 if I went and you know people are
13:47 discussing ideas the other people who
13:49 heard the ideas try to build on those
13:51 ideas they encourage you. So it's a
13:53 culture of optimism it's a culture of
13:54 risk takingaking and I think that's
13:57 really important. So in contrast the EU
14:00 is very cautious and the numbers show
14:03 it. A 2020 report showed that European
14:05 startups get 54% less funding than their
14:07 US counterparts as they mature. The
14:10 report also highlights that just 0.5% of
14:12 them managed to scale at all. And it's
14:15 not for a lack of ambition. European
14:17 founders are innovative, but the money
14:19 just isn't following the
14:23 ideas. In 2024, American and Canadian
14:26 startups brought in over 184 billion.
14:28 That's almost three times more than the
14:29 whole of the EU. When you look at
14:31 venture capital versus GDP, the
14:34 disparity is clear. In the last decade,
14:37 the US averaged 0.7% of GDP in VC
14:40 funding. That's about 350% more than the
14:42 EU at
14:45 0.2%. So, it's clear here, less funding
14:47 and more caution. When you put all of
14:49 these factors together, you start to see
14:51 why so many brilliant European engineers
14:53 are leaving the continent. This is the
14:54 broader brain drain issue that I
14:57 mentioned earlier. Over the past decade,
14:59 the percentage of EU science graduates
15:02 staying overseas jumped from 49% to
15:05 73%. That's massive. And this kind of
15:07 brain drain causes a talent
15:09 shortage. In fact, according to the
15:12 previous report, 63% of high growth
15:14 startups in Europe want to hire more
15:16 skilled workers, but nearly a third
15:18 can't find the right people. The
15:20 applicants often lack the experience,
15:23 skill set, or the mindset to succeed. In
15:25 short, there's not enough experts and
15:27 the people that you need to build global
15:29 consumerf facing tech just aren't enough
15:30 in the
15:33 EU. It's a tough position to be in. But
15:35 it's not game over yet. Europe may have
15:36 missed the first wave of the digital
15:39 revolution in the 21st century. It
15:40 didn't invent the iPhone, the search
15:42 engine, or the attention economy. So
15:46 what now for them? Some say that Europe
15:48 should not try to clone Silicon Valley.
15:50 Instead, they should do something more
15:53 European. So, what does this look like?
15:56 Well, in 2022, they launched the
15:58 European Chips Act. It was a 43 billion
16:01 euro investment to boost semiconductor
16:03 production and reduce dependence on the
16:05 US and Asian
16:07 suppliers. Right now, over 90% of the
16:09 world's most advanced chips come from
16:11 Taiwan. So, Europe is playing the long
16:13 game by investing in its own chip
16:14 manufacturing. But it's definitely not
16:17 easy. Even American giants like Intel
16:19 are struggling to compete making their
16:21 own chips without the help of Taiwan.
16:22 So, we'll keep an eye on how Europe goes
16:24 with this venture. On the regulatory
16:26 front, they launched the Digital Markets
16:29 Act in 2023. This act targets the
16:31 so-called gatekeeper platforms like
16:34 Google, Apple, and Meta. The goal is to
16:36 force them to open up their platforms
16:38 and stop favoring their own products and search
16:38 search
16:41 results. Perhaps the EU is slowly
16:42 recognizing that while it may not have
16:44 the tech giants, it does have something
16:48 else. The power to set global norms.
16:50 Columbia law professor Anu Brford calls
16:53 this the Brussels effect named after the
16:56 EU's political capital Brussels. It
16:59 refers to how European regulations often
17:00 end up becoming the default standard
17:02 worldwide purely because of their
17:05 influence. Like it or not, because it's
17:06 easier than building different products
17:09 or services for different regions. In
17:11 short, Europe may not control the
17:14 platforms, but it can control the rules.
17:16 The European Union has ordered Apple and
17:19 Facebook parent Meta to pay combined
17:22 fines of€700 million euros. The first
17:24 punitive acts taken under the digital
17:26 markets act legislation that's designed
17:30 to curb the power of big tech. These
17:32 measures have nothing to do with trade
17:35 policy. It's European law and European
17:38 law has to be enforced. Whatever
17:41 American government there is, whatever
17:43 other governments may think about it,
17:45 it's in the interest of open markets and
17:48 from these open markets also American
17:50 companies will flourish and will enjoy
17:53 the benefits of a great example of the
17:55 EU's regulatory reach is playing out
17:57 right now with artificial intelligence.
18:00 In 2024, they passed the AI act, the
18:02 world's first comprehensive artificial
18:05 intelligence law. It sets strict
18:08 requirements for safety, transparency,
18:10 and accountability. Once again, the EU
18:12 is betting that companies will adopt its
18:14 rules. But whether this benefits users
18:16 or just turns out to be another
18:18 regulatory drag remains to be
18:21 seen. But among all of this, there's
18:23 some real genuine innovation. For
18:26 example, Estonia, a tiny Baltic country,
18:28 had made all of its government services
18:31 100% digitized as of 2024. Now citizens
18:34 can vote online, pay taxes in minutes,
18:36 and even start a business from abroad.
18:39 Meanwhile, France has quietly built the
18:41 third largest startup ecosystem in
18:44 Europe. Backed by state funding, digital
18:46 health platforms are growing in numbers.
18:48 Startups like Dr. Lib and Allen are
18:51 reshaping how people access healthcare.
18:53 Another app, Monospace Santa, built a
18:55 national platform to securely store and
18:57 share medical records.
18:59 Whatever the state of things right now,
19:02 we can't deny Europe's influence. In the
19:04 18th and 19th centuries, they led the
19:07 world through the industrial revolution.
19:09 In the 20th century, it rebuilt from two
19:11 bloody wars and helped define modern
19:13 democracy and prosperity. But they face
19:16 a new challenge now. So the question is,
19:18 in a world defined by technology, is it
19:20 enough to simply just regulate the
19:23 future? Or must you build it, too? Let
19:25 us know what you think. Would you like
19:27 to see the EU have more of a presence in
19:29 the consumerf facing tech world, or
19:31 should America and Asia still take the
19:32 number one spot? Leave your thoughts in
19:35 the comment section below. If you're
19:36 watching this channel, then you probably
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20:41 from me. Thanks so much for watching. If
20:43 you're new here, feel free to subscribe
20:44 to Cold Fusion. There's plenty of other
20:46 interesting topics on the channel in
20:48 science, technology, and
20:51 business. So, my name is Dogo, and
20:52 you've been watching Cold Fusion, and
20:54 I'll catch you again soon for the next
20:58 episode. Cheers, guys. Have a good one. [Music]
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