Hi everyone, it's Jeremy in London.
Europe's approach to technology policy has been to decry the size and dominance of U.S. tech giants such as Google and Facebook, all the while bemoaning its own inability to create rival companies of similar power. It's led American executives to cry hypocrisy and suggest, at least privately, that Europe's regulatory attacks are driven as much by protectionist impulses as concerns about tax avoidance and privacy.
But times are changing, and U.S. antitrust regulators are now planning probes of their own: The Department of Justice will take on Apple and Google, while the Federal Trade Commission probes Amazon and Facebook. The U.S. House of Representatives has also said it'll look into anti-competitive behaviour. Such investigations could potentially result in the breakup of some companies, or severe restrictions being placed on their business practices.
Meanwhile, Europe may be on the brink of raising some world-beating tech titans of its own. Investment firm GP Bullhound, in a report previewed this week, predicts Europe will have two more companies valued at more than $50 billion by 2021: Stockholm's music streaming service Spotify (currently worth $22 billion), and Amsterdam-based payments processor Adyen (currently worth $20 billion). Europe has just two such companies today: enterprise software giant SAP, and semiconductor equipment maker ASML.
Furthermore, 21 European companies achieved "unicorn status" over the past year, according to GP Bullhound. That brings the total number of companies with valuations above $1 billion in the region to 84—almost three times the number that existed five years ago, it said. And the value of these unicorns is growing at a faster rate than their peers in the U.S., according to the investment firm.
One key to Europe's brightening prospects has been the willingness of backers from the U.S. and Asia to help finance $100 million-plus "mega" growth funding rounds for the region's startups. Since 2016, the number of these rounds in Europe led by U.S.-based investors has doubled.
Europe still trails other regions in total venture capital funding, however: $24 billion was invested in 2018 compared to more than $130 billion in the U.S. and about $70 billion in Asia, according to data from KPMG Venture Beat.
If the region does produce a new technology titan soon, it may look very different to the U.S. firms under pressure from regulators. With the exception of Spotify and some of the digital-first fintech firms like Revolut, most of Europe's big money has gone into startups selling business software or trying to reconfigure the plumbing of the financial system. Those business models tend not to raise the same alarms over privacy rights and consumer protection that data-hungry, consumer-facing companies do.
So maybe Europe can create its own world-beating tech titans without smacking into the same anti-trust concerns that are now dogging America's digital giants. That said, as the example of SAP shows, if you create a $100 billion technology titan but your 10-year-old has never heard of it, does it really count?—Jeremy Kahn
Post a Comment