By tech, I mean the likes of Google, Facebook, Amazon, and other information technology giants, of course. The answer lies, at least partially, in structural explanations like market fragmentation (there are 24 official languages in Europe) or clumsy policies on key subjects like employee ownership. But the most interesting explanation to discuss is the idea of cultural differences between Europe and the US making it harsh for the former to build its own arsenal of tech mega-corporations. That’s the idea entertained by Dan Wang (channeling Peter Thiel) in his blog post Peter Thiel and thinking for yourself.
Wang develops Thiel’s observation that competition for status is uniquely intense in America - compared to European countries such as Germany or Sweden. This strong instinct to keep up with one’s peers squeezes the independent thinking out of promising individuals, who end up seeking more prestigious career paths over unconventional ones with both more upside and downside (conformity is a familiar theme for Wang). Therefore resulting in fewer outliers among society.
The issue with this reasoning, as the author points himself, is that the US is actually the home country of the most famous business contrarians in the world, as well as the impressively powerful companies they built as a result.
The nuance I believe to be missing from that analysis is that, while status competition may very well be more intense in America than in Europe, America, by the sheer size of its unified market and demographic weight offers more “prestige niches”. There are more “ways to be successful” in the US than in any European country. Germany being much smaller and less culturally diverse does also lead to conformism. One of these ways is through the whole tech startup game. In Europe, the odds of finding actual solid success in the startup ecosystem are much lower, as the tech ecosystem does not have enough “Google millionaires-types” - empowered individuals with 1. valuable connections, 2. access to capital, and 3. operational expertise (succeeding in consumer technologies arguably require way more tacit knowledge than theoretical one).
There is also a fundamental difference in the way Europe and America think about business.
There is a strong will, in Europe, to keep the sovereign states clean from the influence of any potentially competing authorities. This defiance for any potential threat to the legitimacy of the state shows itself in Europeans’ attitude towards corporations. In Europe, business is about money and nothing else. Companies here tend to stay true to their legal mission: to provide the largest return possible to their stakeholders. In practice, business and political elites swim in the same waters, but the electorate do not tolerate open camaraderie between the two. It’s much rarer for European business magnates to run for public offices than their American counterparts. The slow growth of the region results in companies tending to be happy enough with niches providing them with a comfortable revenue stream.
In contrast, in America, corporations are a pretty tolerated unofficial branch of power. Success in business is considered a perfectly qualifying background for a political career.
Americans’ historical distrust of the state gives more leeway for corporate boards to dream about being more than mere money makers. Silicon Valley startups’ famous obsession for “changing the world” is not an empty buzz phrase. American companies are after power. And in order to get it, they look for the part of the value chain giving them the most leverage. The FAANG’s most striking characteristic isn’t their EBIDTA, but their absolute dominance over their respective ecosystems. And to reach that position, investors are ready to unload huge sums of cash into money-losing entities, as long as the resulting corporations stay dominant.
Companies like Uber, Amazon, or Google are the height of what business is truly about in the American tradition: power, influence, leverage. None of these corporations seem satisfied with simply making money (Uber is famously not profitable yet) - they seek bolder objectives than more traditional companies, eventually even competing with the federal government’s on some grounds. Facebook’s Diem (former Libra) & Internet.org initiatives are an exemple of such ambitions.
You know how you survive? You make people need you. You survive because you make them need what you have. And then they have nowhere else to go.
Anthony Michael Hall as Bill Gates, Pirates of the Silicon Valley