There is no "Europe", though. France and Germany speak different languages and have different legal systems. Spain is different again. And Poland. And Greece. And Ireland. And Italy.

Put it this way: if products depend on viral growth, then European countries are socially distanced from each other as a result of these barriers.

People downvote this comment, but it is correct, the EU has A LOT of fragmentation at the national level.

It's obviously a complex situation, but I think the regulation of small business has more to do with it than the social diversity in the EU (which matters as well). By the time a company in the EU is big enough to go from national to expanding into the wider EU markets, it has capital to do so, and there is no shortage of local experts to help with that. But getting to that scale, or really to anything that requires more than a couple employees, is the big hurdle to overcome. I am not sure how to overcome that and respect employee rights, since a strong progressive tax on corporations that would subsidize some of the employment costs of smaller businesses would make the larger EU companies noncompetitive internationally. So in a real sense the failure of international labor laws is partially responsible for the difficulty of EU companies to innovate (or more precisely, to profit and grow based off their innovation).

Another point is that historically the US tech sector took off fast and takes off fast, so they are awash with cash based on being first movers, and they have a competitive advantage when it comes to attracting talent. I think that advantage has been perhaps completely destroyed in the last 4 years due to local political and social issues making life there unattractive. Sure many people will run for the money, but perhaps now not enough to create imbalance in the labor market. Also, companies today understand better how fast things scale in the US due to the single market/language/comparatively lax regulations, and they know to focus on that market much earlier in their growth cycle. This contributed to the success of Spotify, Zendesk, etc. So if I had to predict there will be a rising percentage of successes out of the EU in the next ten years compared to the last ten years. But it's always going to be hard to start.