Good at Wine, Bad at Computers

Why does Europe suck at technological innovation?

By Brian Palmer

France's president Nicolas Sarkozy. Click image to expand.The French government has banned broadcasters from using the words Facebook and TwitterThe French government has banned television reporters from using the words Twitter and Facebook on air, because all that free advertising gives the companies an unfair advantage. European competitors have a long way to go before posing a challenge to the social media giants, though. According to Bloomberg, only seven of the world’s best-performing 100 tech companies are based in Europe. Why is Europe so bad at technology development?

Heterogeneity, among other things. European policy makers have labored for decades to integrate into arguably the largest economy in the world. From the perspective of a young software company, however, Europe is still 27 very different markets. That means a new social media site in, say, Norway, has just 5 million potential users—about the same number you could find in Alabama—before it’s forced to translate its appeal to different languages and cultures. It would need a new interface, a different marketing strategy, and probably different advertisers, not to mention the difficulty of dealing with new regulations and multiple tax schemes. This situation lends itself to a number of smaller companies dominating national markets, rather than the high-tech behemoths that rule the United States and Asia. To be fair, Europe has produced a few tech giants, such as global business software mammoth SAP. But, by any measure, its technology output is out of step with its overall economic might.

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