We're in the service economy now, and Europe has no real single market for services, due to all kinds of national regulations that differ throughout the block. Nor does it have well-developed financial and labor markets, partly also because they are currently partitioned by nationality. Its stock exchanges are too many and too small, etc. The list goes on.
For many big European companies, an astounding percentage of revenue comes from the US or China. But if you start a startup building for US/China from the start, why would you want the HQ to be somewhere in Europe?
Edit: This also means that the story is very very different for products that can be shipped in boxes. Europe does extremely well in cars, beverages, clothing, chemicals and that sort of thing. Also electrical utilities. No idea why, tbh.
It makes it quite tricky to offer services across the whole of Europe without a lot of investment.
There are other costs though - such as support. In the US you can grow pretty well with a large market providing support in one or maybe two languages. In Europe, you need to provide support in English, German, Dutch, French, Italian, Spanish... and there's more besides, and some tricky local dialects.
edit: also the cost of maintaining translation as you grow or make changes means it's not a one-off cost, it's a constant extra burden - even if it's not a huge one. For a larger business it's plenty doable, for a small startup (especially a non-funded one) it's very difficult.
edit 2: also I'm meaning mostly western/central/northern Europe. If you go further east things get trickier still.
Well, that's fairly straightforward. All European co-operation and regulatory is implemented through the EU. It didn't used to be like that, there used to be quite a lot of separate organizations that coordinated countries and helped them work together, but over time they were all absorbed into the EU power structures.
That's a problem because the EU agenda is extremely dominated by France and Germany to the extent that the priorities of the other members don't matter much. The German economy is of course famously driven by export of goods, so not surprisingly, the EU has spent great effort on ensuring that goods can flow freely throughout the EU. There was also a big economy that was services driven - the UK. Equally unsurprisingly the EU never cared about creating the single market in services, despite sometimes promising to do so, largely because it would mean requiring France and Germany to open their markets to British companies, something they saw no reason to do.
In later years another problem emerged, which is that the EU developed a taste for power and began using whatever limited control it had over services markets to try and control neighbouring states. In particular trade in financial services is (somewhat) controlled by the EU which has a concept it calls "regulatory equivalence". We must call this a concept and not a real thing because designation of a nation as having "equivalent" regulations has nothing to do with the actual regulations or how similar they are to the EU's own, it is an entirely political and ideological matter that's used as a negotiating lever by the Commission, which can and does declare countries "equivalent" or "not equivalent" at any time, without any changes to actual financial regulations being required.
For example, despite the UK having 100% aligned financial regulations because it only just left the EU, the Commission has declared its financial services regulations to be not "equivalent" to the EU's. That is obviously a lie, but when you understand that the bureaucracy doesn't really care what words mean and treat it as an arbitrary label or tool, then it makes more sense: the EU wants to hurt the British economy so bans its services from its own markets by claiming the identical regulations somehow aren't the same.
This problem is not specific to the UK or Brexit. Financial equivalence was being used as a bartering tool in trade negotiations for years before that. The EU also likes to ban the Swiss financial firms from EU markets from time to time as part of trying to force Switzerland to accept EU rules in unrelated areas like how trade unions are handled.
Thus the lack of any unified services market in Europe can be understood as having three inter-related origins:
1. All international cooperation in Europe is controlled by the EU which means ultimately by the agenda of just one person (Currently von der Leyen).
2. That persons is appointed via presumably complex back-room deals of which little is publicly known, but which appear to usually be the result of some kind of horse trading between France and Germany. For example von der Leyen is a notoriously incompetent aristocrat famous mostly for screwing up the German military - nobody knows on what basis she got the job of Commission president, beyond some vague comments from people close to the process that the next Commission President had to be a woman, but we can assume she was placed there due to her political acceptability to Merkel and Macron and her willingness to prioritize their interests. The same can be seen for how Christine LaGarde (a French woman) ended up running the European Central Bank. Certainly, the views of other nations had little to do with it, given their track records.
3. The EU then not only fails to prioritize services integration but actively abuses service markets as part of waging trade wars, in particular, to try and force non-member states to effectively become pseudo-members in which they obey the EU in unrelated areas without actual full membership.
> All international cooperation in Europe is controlled by the EU which means ultimately by the agenda of just one person (Currently von der Leyen).
1. All international cooperation in Europe is not controlled by the EU.
2. The EU is not controlled by the President of the Commission. There's also the Council and the Parliament, none of which can do anything without approval from the two others.
The EU is controlled on a day to day basis by the President of the Commission. Yes, the Council theoretically selects the head of the Commission although because we have no idea how they do that, and because the outcome always seems to be some stitchup between France and Germany, it's very hard to say to what extent the Council really does control that process.
And as for the Parliament, please. It cannot actually change the law, which means it's not a Parliament at all. It just calls itself that. It can only rubber stamp whatever the Commission wants to do, which it always does because the only people who want to take part in a fake Parliament are groupies who think the EU shits rainbows. And even then, the Commission can and usually does just bypass it. None of the changes to "equivalence" I've talked about required the Parliament to do anything, to pick just one example. The Commission just announces it, and it's done. It's by far the world's most powerful executive and there are basically no working controls on its behaviour, even by Treaty, which is often ignored when convenient.
But what if the “bigger is always better” mantra is actually wrong? (Many fallen empires come to mind.)
Maybe it’s an overall healthier state of affairs to have less concentration of power?
So maybe Europe is just fine?
Unfortunately the list doesn't allow you to sort by Industry. But you can easily see larger number of Top 100 are Tech companies. Nearly Half of the Top 20 are Tech companies if you include Tesla.
Then there is the Tech / US stock market value differential.
So EUR aren't really doing that bad. Not to mention half of your 5G equipment are from EUR. Ericsson and Nokia which has a low market cap but fairly high importance.
I am not an Open Source advocate by any definition. As much matter of fact I think I prefer to use something like Shared Source as in Unreal Engine. But anyway since tech will be the infrastructure of any modern society, I would not be surprised if one day, OS, and basic form of Software are all Open Source.
Bingo. For example I, a European worker, wake up in the morning by the alarm sound of my US developed phone who's software and services are also developed in the US. I then power up my US developed laptop and use a US designed OS and read and reply to emails using a US developed solution part of an office suite also made in the US. During work, I deploy my work, which helps people book flights, to a US developed cloud solution. After work I text my friends on a US developed messaging solution and at the pub one friend keeps posting pictures to a US developed social media platform and another swipes through photos of potential mates on a US developed dating platform. Hell, even when I want to use online banking or online government services I'm still relying on mostly US tech to get the job done.
How the hell is this absolute dependence on US tech not scary for Europe's sovereignty is beyond me. If the US wanted to flex its power for shits and giggles it could just ask the Microsoft, Apple and Google to turn off their services in Europe for a couple of hours and send Europe to the stone age.
Ikea would be valued at less than Target if it were public (it's far smaller than Target, with better margins). It takes a $200 billion market cap to crack the top 50, Ikea isn't close.
Bosch would comparable to or a bit larger than 3M in valuation. They're not particularly a growing business, they've been stagnant for a long time, that would hit the multiple they'd receive, as would their segment (industrial) and that they're Europe based (European companies almost always receive a lower multiple than their US peers). They'd be worth more than Ikea, granted.
As this divide grows, I worry that Europe may resort to protection mechanisms as a way to shield local companies and give them a chance to "grow".
The future is more protectionism and less free trade. And that's not good for anyone.
Unfortunately for Europe, making empty excuses won't help (as the past 20 years has overwhelmingly demonstrated).
Free trade does not imply putting monopolies into check, as all monopolies are not an inherent restraint on trade. Besides that, there is no free trade anyway. It doesn't exist anywhere. When you sign trade agreements what you have is not free trade, you have structured trade agreements, not a scenario where anything goes. Trade agreements are specifically a restraint on trade, by agreement. Free trade is entirely an intellectual con. It can't exist, it has never existed, it will never exist. There isn't a single major nation that actually wants free trade, either.
And further, Europe is more protectionist than the US is and that has always been the case throughout all of US economic history. It will always be the case, due to the extreme nationalism that will always exist in Europe and the nationalist forever-conflicts between nations there which also will never cease.
Google wasn't a tech giant before it had an aging, entrenched monopoly? Of course it was. Google was one of the world's largest technology businesses by 2008, a mere decade after its founding.
Apple doesn't even have a consequential monopoly anywhere on planet Earth. In the US it has half the app store market, that's it. Outside of the US its position is dramatically smaller.
Amazon doesn't have a monopoly in anything other than e-books.
Microsoft was one of the world's largest technology businesses before they acquired their desktop OS monopoly.
Intel was one of the world's largest technology businesses before it acquired a monopoly in PC microprocessors.
And Facebook - well absolutely nobody is stopping European nations from creating their own globe spanning social networks. The Europeans haven't done it and can't do it, for obvious reasons (fractured, incompatible markets).
There are no nations in Europe eager to hamper their own giants, either. Germany isn't eager to cripple their auto giants (now or in the past). France isn't eager to cripple LVMH. Italy isn't eager to cripple Luxottica's monopoly. Spain isn't eager to crush Inditex. The Europeans wouldn't be rushing to destroy Airbus if they were to acquire a monopoly aerospace position. And so on.
Europe and USA are not playing on a level field. The USA has a truly unified market (commerce / law / language) which lets its companies grow faster to monopoly, and from there sheer size and network effect prevent any competition from emerging. It is hard to blame European entrepreneurs from failing to compete with Google / Facebook when Americans can't seem to create any competitive alternative either. The nature of the game is whoever gets to monopoly first wins, and at that game a fragmented Europe is at a fatal disadvantage.
The only counter is to prevent American monopolies from operating in your market to let local companies survive their slower growth. China has applied that strategy successfully, I hope Europe starts doing the same.
Wrong, Apple has a bigger market share in Japan than in the US.
The list is skewed by propped up high growth stocks with much more built in risk than we might imagine to their long term growth.
I don't see how Facebook necessarily has fat margins and growth for the next 20 years - they could conceivably go into decline.
All the measures are crude but Revenues might be the best, because frankly 'profits/earnings' are more of an investor thing, that doesn't take into consideration all the other members of the value chain.
Maybe 'Gross Margins' might be even better though difficult to determine, because Wallmart and Amazon (retail) operate on thinner margins, 'most of their sales' go down the value chain.
By 'Revenue' Germany is actually batting above it's weight, Europe could probably do to have some kind of continental winners in certain areas but that's a really hard thing to do. Even with EU integration ... nobody wants to give up their national champions.
The biggest negotiation ever that could happen in Europe would be for Germany/France/UK to maybe to agree on different sectors and allow/promote acquisitions along those lines. That will never happen of course. That could happen but more by large funds driving it to happen.
94B and 58B respectively, both comparatively new companies. It’s just less easy to scale up here than it is in the US with a huge economy and one language.
Prosus is also there on the first page
The Federal reserve
The IMF and in general all the Bretton-Woods establishment designed and operated to ensure US economic supremacy. It is just not "those silly old-fashioned Europeans" playing the protectionism game.
A couple o years ago, local industry lobby groups got the government to legalize the 12h workday and one top company I interviewed for had a time punching device next to the coffee machine so that employees could punch out during a coffee break as the company considered coffee breaks as non-working time for the employees and did not count to your 8h/day working time, just like your lunch break.
The problem is that the companies are too big, not that there are too few big companies in some region.
If it were true, the US wouldn't have one of the highest median income figures. The US would be a giant sweatshop due to the huge corporations across its economic landscape. The US median person wouldn't be wealthier than the median in Germany or Sweden (given Germany is supposed to have vaunted worker rights, which apparently don't add up to much in the way of worker wealth).
The best employers in the US are major corporations, they almost universally pay the best and offer the best benefits. It isn't even remotely a close comparison. The same is largely true in Europe and Asia.
It was Amazon that went to $15 / hour nationally for their massive labor base. They're the ones that finally moved the needle on the national discussion about minimum wages, regardless of if you think their motivations were pure or not. Before that it was just endless politicking. As far as unskilled labor is concerned, everybody else ran from behind to catch up to them after they did that. They're still the ones setting the pace.
It wasn't mom & pop shops that moved the needle. They pay horribly and offer horrible benefits as well as exceptionally poor job security. If you want to really suffer, work for a small, struggling business. The large corporations reach global markets and dramatically scale their output per worker, which enables them to pay far better than local / domestic-only businesses, and that's very rarely not the case.
Large companies like those in FAANG are rewarding "high-skill" workers handsomely while leveraging their size to acquire competitors.
As a so-called "high-skill" worker, I don't have to worry so much about that aspect of things, as I'm sure is the case for most users here on this site.
The other A in FAANG busts unions and instead of providing safe working conditions, just parked ambulances outside to load up workers as they fell from heatstroke.
So yeah, um, enjoy your free food, dude.
Here’s the larger paragraph from Zero to One.
> Indefinite Pessimism Every culture has a myth of decline from some golden age, and almost all peoples throughout history have been pessimists. Even today pessimism still dominates huge parts of the world. An indefinite pessimist looks out onto a bleak future, but he has no idea what to do about it. This describes Europe since the early 1970s, when the continent succumbed to undirected bureaucratic drift. Today the whole Eurozone is in slow-motion crisis, and nobody is in charge. The European Central Bank doesn’t stand for anything but improvisation: the U.S. Treasury prints “In God We Trust” on the dollar; the ECB might as well print “Kick the Can Down the Road” on the euro. Europeans just react to events as they happen and hope things don’t get worse. The indefinite pessimist can’t know whether the inevitable decline will be fast or slow, catastrophic or gradual. All he can do is wait for it to happen, so he might as well eat, drink, and be merry in the meantime: hence Europe’s famous vacation mania.
Thanks for the quote; the Thiel book sounds interesting.
I've been thinking about how familiar the discussion here and in the recent Economist post sounds. Isaac Asimov wrote a short story, "The Evitable Conflict" (1950), in which a future world government is divided into four regions (<https://imgur.com/N2g6DKE>). Without spoiling the story, the European bloc is described as being the smallest by population, slowest to grow, becoming a backwater compared to other regions, and content to remain that way.
Three of them were created before WW1 (that's a one) and Dior in 1946. And all of them thrive because of the lifestyle image associated to the "France" brand since then.
Instead there's tons of opportunities investing in the mobile space. From the iPhone 12 chip built with a Dutch ASML machine, to companies like MessageBird or Adyen to name a few more Dutch companies.
I agree there's plenty of competition in the US, but there's no other single market that even came close to the US until China came along, but even that is just a large number of people making an average of 10k a year. The EU is a big market but so is 'Asia', at the end of the day, even with a lot of regulatory integration, they're still separate markets that each require their own approach, very much unlike the US. It's no surprise that lots of product launch rollouts in the EU of US companies are slow and skip lots of EU countries, compared to launches in the US/Asia. It's not because the EU has 'missed out on the tech revolution', it's because the EU isn't really a single market and it's really tricky to launch in 27 different countries. That's true for EU companies just the same as it is for non-EU companies. It's why there's hardly a European Amazon, but there's tons of local EU companies that I like just as much (e.g. Bol.com in the Netherlands). They just can't easily go beyond their borders, and eventually get bought by a US/Asia player with a massive domestic market which now has a warchest to dominate the small EU players, too.
In these markets the EU is at a natural disadvantage compared to the US, China and maybe even Russia. It is much easier to grow if you have just one huge country that you can grow within before expanding internationally.
But then one should also ask, why hasn't such a B2C tech company emerged in Germany or France or Italy, all of which have sizable populations.
I guess the tech people in these countries where getting hired by traditional industries to work on boring industrial applications.
And the finance people were in no mood to finance a web search engine or a social network in those days.
We had lots of Amazons and lots of Facebooks but they never attempted to expand beyond the national borders of their respective countries. I guess some of them were relatively profitable, so maybe they thought they had a nice deal going on, until the American giants came knocking on the door.
Home prices and valuations are skyrocketing is a different kind of inflation, just not the one we're used to. Regular inflation is hitting hard due to COVID etc. so we're going to see the populist result of that soon.
There's no real way to demonstrate that a few larger players are better than many smaller ones.
Maybe is good for economies of scale, but mainly for the big fishes and only marginally for end users.
This concentration of wealth generation is astounding.
Google demolished the newspapers classified ads. While probably more effective than otherwise ... it didn't all come out of nowhere.
we all know why USA has most of them, their hegemony plays a big role
what's interesting is the GDP of EU was bigger than the US one in 2007, after 2008 it started to stagnate
Since financial markets are open for anyone to invest in anything (pretty much), I also don't get why it matters where market cap is created.
For instance: Tesla has more market cap than a lot of European ICE competitors. But what VW contributes to European GDP still is much bigger than Tesla's contribution.
It's quite obvious when someone's talking about 'fulfilling promises in Europe relating to 70 years of non-war' it's referring to one of the central tenants of the European Union's founding, which was to prevent another war among the powers in the EU. It's commonly said, because it's true, that this was one of the great benefits of the EU. The conflicts you reference are essentially all outside the EU, e.g. Armenia, Russia, Kosovo etc.
I'm sure you agree that it makes no sense to say that a continent like Europe, Asia, Americas, without any supranational government to ensure it, can "make promises for years not to have a war". It's clearly in reference to the EU, comprising of most of Europe, which is known to have made that commitment of peace among its members in its founding, and has been known to have succeeded in that commitment so far.
Yes it's far more integrated than any other group of countries, but they're still separate countries. The budget of the European Union is literally <1% of the EU GDP, for example. Although very influential, we shouldn't overstate its power. Even slight increases of this budget is immediately met with populist rhetoric in each member state, about how all money is flowing towards Brussels which is ostensibly deciding everything.
And on a cultural level, there's no real integration whatsoever, not any more than the regular globalist integration that's not European in nature (e.g. speaking English and watching Hollywood movies). As a Dutch person I literally cannot even understand the native language of 97% of the EU population.
It's a bit like asking why the United Nations hasn't worked out yet and why there's no single planetary utopian government yet.
That having been said, I would say that the EU is an economic and military superpower, but it's not as direct or centralised like a single nation. But count the number of times the EU has been attacked, or count the amount of nuclear-able countries, or the EU countries part of the planetary superpower that is NATO. Of course it's not geared as being a EU military, nor geared towards fighting far-off wars, but it's super powerful for sure. As for Economy, on a PPS basis China, US and EU are all 16% of the world economy, on a nominal basis it's 15, 24, 18. Again, not centrally-steered but definitely a superpower.
But for the same reasons you'd say "yes but it's decentralised, not one nation, so it's not a superpower despite all the economic/military might", I say that you can't even expect it to be. After all they're just 27 separate countries with their own governments, 13 of which are smaller than New York City, and California alone being bigger than all but 4 of them.
Economically, the EU is very powerful and influential. It exerts influence through trade agreements, standards and sanctions. Individual member states have capable nuclear arsenals and are actively engaged in missions around the world.
Those are in my personal opinion much better things to strive for than having the largest corporations and military, which I find to be more harmful than useful.
There are other things to admire about the US though, like their creativity and scientific excellence.
Best I can tell, mix of apathy, resentment towards people who work hard, and generally smaller ambition and perspective. We have the same problem in the UK so it's not just the EU.
That doesn't mean I approve of everything they do. That doesn't mean I can't or won't decry their putting thumbs on scales toward a certain type of bien-pensant ideology. That does mean that, overall, I am very, very glad that they are American instead of Russian, Chinese, or even British, French, or German.
Graphic designers are in every non-trivial company. Professional photographers are part of every western community. Millions of amateurs edit and manage their photographs.
Even relatively small media shops spend tens of thousands on Creative Cloud licenses.
You already have the evidence - their market cap.
For example in France, to pay 100 euros in salary, the employer needs to spend about 250 euros.