Well, Europe has Oxford and Cambridge and?
Overall, I'd say the model makes it harder for something like Google to be created in Europe, but it makes it easier to get an education that will get you a job at Google.
As another commenter noted, mainland Europe tends to spread their academic resources rather than focusing on a few prestige sites like Oxford and Cambridge, but there are many fantastic CS departments. I don't know the current hot areas, but when I was a researcher in the early 2000s, there was lots of Haskell activity in Chalmers and TU Berlin.