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Why Europe Failed to Dominate Tech
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[Music]
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 NA
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. But when you
really think about it, these 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 Tik
Tok 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 was
Nokia, Seammens, and Ericson. Not to
mention early pioneers like Alan Turing,
Conrad Zeus, and Tim Bernest 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. Let's take a look.
look. [Music]
[Music]
You are watching Fusion TV. [Music]
[Music]
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
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 forwardthinking a
society is. By most of those measures,
Europe is doing more than fine. In fact,
in many areas, it'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 worldclass engineering. Legacy
industries like automotive, aerospace,
and rail are still world class. Of
course, Germany's BMW, Mercedes, and
Volkswagen. France's Airbus competes
directly with Boeing, who I don't have
to tell you has their own issues. Europe
has crossber highspeed rail. And
although green energy is sometimes
frowned upon by some, parts of Europe
are 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 Sorborn, and
TU Munich. These schools consistently
produce top tier talent. Of course,
though, many of those great minds leave
towards 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'll
touch on later. But for those who stay
in Europe, Europe actually invests
heavily in its own potential. In 2023
alone, EU countries spent €381.4 billion
on R&D. And that's not just theory. Look
at CERN in Geneva. the birthplace of the
worldwide web or the world's most
powerful particle accelerator or the ITR
in southern France where scientists are
chasing nuclear fusion. These are
serious global scale science projects
and they're happening in Europe. Sure,
in Europe there's 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. And
four of the world's 10 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, 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 consumerf facing
either. So there are successful tech
companies, but in the context of the
tech world, Europe is far from the
beeroth. If we look across the globe, US
consumer tech companies are just
different. Apple, Google, Microsoft,
Meta, Amazon, these brands are
wellknown. 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 in 2024. In contrast,
Europe's top 11, including SAP, ASML,
and Spotify, amounted to 2.2 trillion.
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
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 Bite
Dance, 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
[Music]
tech based companies? What happened to
Europe? Europe has 200 million more
people than United States. Why do we not
have any technologies that Europeans
developed that we need to use today to
get through our life in United States?
What happened to Europe's uh
inhabitedness? Listen, I think there's
two reasons and from my personal experience
experience
um I moved to the US when I was 16 and I
never came back and recently also became
an American citizen. One thing that I've
noticed is some of the best European
entrepreneurs, they leave to start their
companies in the US. So there's some
very famous companies like Snowflake,
but they were started actually by three
French people, but 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 in the US. 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,
understand 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. And then after that I'm in
one country and then I need to have a
different set of regulation that I need
to respect to be in the big six. And
then there's I don't know 30 or 40
countries in the European Union each
with their own regulation. I rather
start my country in the US uh start my
company in the US then you move very
quickly to Canada, UK and Australia and
then from the UK you move to continental
Europe. That's what we see. The man you
just heard is Philipe Lefont, 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 Armar, 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. End quote. 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
tech
companies. There's a saying that's going
around online, America innovates and the
EU regulates. While this is true at a
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 2 billion for transferring
European Facebook users data to the US
without adequate protection. This is the
largest fine under GDPR
rule. And of course, this next one
affects hundreds of millions of people.
The EU forced Apple to adopt the USBC
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. And by proxy, so are European
investors. They're much less likely to
take chances on bold, unproven ideas.
Hampus Jacobson, a Swedish entrepreneur
and the founder of the VC firm Pale Blue
Dot, puts it this way to TechCrunch.
Quote, "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 Lord, there's a few."
End quote. 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 consumerf facing. You can see
this pattern in the kind of ventures
that pop up. In 2025, there's
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 Pachai, Google
CEO, on the matter. Yeah. Starting up a
company and even having failed, you
know, you can wear it like a badge of
honor, right? And uh I think that's
important you know culturally you know
risk is rewarded. I remember when I
started working at Google you know I if
if I went and you know people 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 takingaking and I think that's
really important. So 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.
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. And 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's not enough experts and
the people that you need to build global
consumerf 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
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 Anu Brford 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, because 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 and
from these open markets also American
companies will flourish and will enjoy
the benefits of 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 Dr. Lib and Allen are
reshaping how people access healthcare.
Another app, Monospace Santa, 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, it 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 consumerf facing tech world, or
should America and Asia still take the
number one spot? Leave your thoughts in
the comment section below. If you're
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you've been watching Cold Fusion, and
I'll catch you again soon for the next
episode. Cheers, guys. Have a good one. [Music]
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