German tech guy notes that Europe barely has a presence in the tech sector.
- Hardware dominated by East Asians; Europeans used to do this, but Phillips, Nokia had their heyday many years ago.
- Internet infrastructure (e.g. cloud, DNS) dominated by the United States, though China has its own self-contained ecosystem.
- Platforms (operating systems, social networks, search engines, app stores) are dominated by the United States. Europe has almost zero presence here.
- Europeans do have some successful apps, e.g. some video game companies, various music and shopping services.
Most significantly, there are no European general purpose tech giants, such as both the United States (Google, Amazon, Apple, Microsoft, Facebook) and China (Alibaba, Baidu, Tencent) have in spades, which not only have one or two orders of magnitude more significance than any of the European app companies, but end up acquiring many of them; it is telling that of the nine given examples of successful European apps, Skype and Minecraft were both acquired by Microsoft, while Soundcloud has an uncertain future.
Some possible reasons he gives for Europe’s lack of success:
- Regulation – Taxes, labor laws, privacy laws, red tape.
- Investment climate – Harder for startups to raise money.
- Geography and Demographics – The United States and China are homogenous markets of many hundreds of millions of people; Europe is a fragmented mess.
- Attitudes – Could Europeans be just more pessimistic about tech and business? Which translates into subpar regulations. (In contrast, Chinese are highly technophilic).
- Startup ecosystems – The US has Silicon Valley, China has Shenzhen; what does Europe have? Since it lacks giants, it is subject to a constant brain drain to Silicon Valley.
From my own observations this all seems to be pretty accurate true. Southern Europe is hampered by red tape; northern Europe is better for doing business, and has higher human capital, which is reflected in more tech companies (the biggest, Spotify, is Swedish), but is likewise hampered by higher taxes and strong privacy laws (esp. Germany).
With a mere $14.4 billion worth of venture capital activity in 2015, Europe lags behind both the United States ($72.3 billion) and even China ($49.2 billion) in this sphere too.
The US and China’s advantages in achieving economies of scale would seem obvious. It might also be the most important factor. Russian regulations are no better than Europe’s, and its level of VC funding is truly minimal, yet it does manage to have one general purpose tech company that is at least noticeable at the global level (Yandex). China has a far bigger market than Russia, and its web censorship doubles as protectionism in all but name (as the author notes in another video), so its major tech companies are now becoming more and more comparable to the American giants.
On the whole, so far as tech companies are concerned, Europe seems to serve as a mere human capital repository for Silicon Valley.
This would seem to be important for a couple of reasons.
1. It’s yet another demonstration of how the only two countries that really matter in the world today are the United States and China. Europe? I’m sorry, but US conservatives pegged it right. Museum cum retirement home that has nothing to teach anybody.
2. According to O-Ring theory, most value is generated through complex production chains, whose highly productive workers pull up the wages of workers in simple sectors far above the Third World levels they would otherwise be at. But few of those are forming in Europe, and many that do, end up bleeding off into the US anyway.
3. It’s interesting to speculate on what this means for the geographical location of the first artificial general intelligence (probably the most portentous event in all history). This might mean nothing much, but it could also mean a great deal. Anyhow, if this AGI requires large computing and technical resources, it will most likely appear in the US, followed by China; in contrast, there is a close to zero chance it will happen in Europe or anywhere else.