Why do you make it sound like they don't? The EU invests massive amounts in technology (in regards to its paltry investment budget, but that's another debate).
One does not prevent the other. And calling regulations against clear abuse "endless bureaucracy" is insidious at best.
There is a huge amount of money available, but it's locked behind layers and layers of bureaucracy. It is a huge waste of time on both sides, for some anecdotal I'm procrastinating from an application as I type. I should be coding or doing something otherwise useful.
The situation has devolved to where startups treat public funding as though it were revenue and have dedicated teams to chase it.
The Economist had an article here a few days ago lamenting that Europe fails to produce IPOs, which is where the actual problem lies. If ExpectedValue[European Startup] = ExpectedValue[Startup] | No IPO, then it's no wonder European startups are valued at 10% of their US counterparts.
The EU needs to get out of the way and end its Lots of Little Winners policy, because without winners you just wind up with Lots of Little Losers in a globalised economy.
Shouldn't the goal be producing tech that's beneficial?
A lot of European startups don't get to the size where an IPO exit would be appropriate because a US company buys them before that can happen.
In a unicorn situation, the founder will generally take money off the table early and will be okay regardless. Just look at WeWork.
I'm happy that the EU still bets on the small guys.
And we’ll they actually cannot pay what they promised, so they keep upping the pension age etc.
This is how it works in America, too. Professional grant writers who know how to get funding are basically the rainmakers for research teams.
An interesting question is: what's the ROI of this investment. Anecdotally, the over the last 50 years the EU has been loosing their leadership in field after field. First to the US, then Japan, S Korea, Taiwan, now China. With the loss of the UK Arm is no longer an EU company. Have you looked into Linux commits recently [1], or where papers come from in the top CS conferences?
Here's the relevant Wikipedia article: https://en.wikipedia.org/wiki/Arm_Ltd.#Changes_of_ownership
Well, GP wrote "endless bureaucracy" not "endless democracy", unless the comment has been edited.
And that, IMNSHO as someone who has founded tech businesses here, is entirely fair criticism. The environment created by all those regulations is insanely hostile to tech entrepreneurship, and it's not as if many of those regulations are well considered or effective at protecting vulnerable groups anyway.
The worst part is, I'm not convinced anyone deep inside the EU corridors of power even realises this is what they are doing. If the first step in solving a problem is understanding that it exists, the EU is still at step 0.
There is no reason that a small team of founders or even a solo founder should not be able to start and grow a tech/software business well. The natural barriers to entry are very low in this industry. If you have a useful idea, the technical skills to implement it, and the willingness to try, you should never need lots of external help to build a viable business.
Obviously there are advantages to taking substantial external investment or other funding, and doing so usually also comes with strings attached. You have to weigh up whether the cost/benefit is favourable. But in a tech/software business, this should primarily be useful for accelerating the success of a business already destined to be successful. We're not talking about manufacturing where you need to pay for factory facilities and supply chains of physical materials and other big up-front costs before you can start creating value yourself that you can charge for.
The reason it is increasingly difficult for any small founding team to actually do that in much of Europe has a lot more to do with regulatory barriers and red tape than lack of funding. No startup is going to perform well if someone keeps distracting the people building it and making them do things that aren't directly adding value.
There is a lot of bs thrown around e.g. GDPR is far from evil or bothersome, as well funded lobby groups have made it out to be. You don't need cookie warnings if you use cookies to log your users in, only if you sell your users out to google and other analytics companies. You are obliged to have unsubscribe links in your emails to users. You have to provide and delete data you hold on specific users if requested. From a few hundred thousand users you need a data controller which is for ally responsible to watch out for data breaches (this is just an identified person, not a full time post). What's the big deal?
Much more stifling are e.g. the processes to register a company in the country you are based in or to get a bank account, and of course Europe's language diversity shrinks the potential reach so most that want to scale do so in English and then find it convenient to have offices e.g. in the US or UK.
While this is not intended as a criticism of you personally, you have ironically just demonstrated a big part of the problem. I might reply that I have seen this response a lot, no matter how often I have previously given detailed examples, sometimes even in the same forum. A lot of people who haven't themselves tried to run a business in this environment are almost completely unaware of the hassle it can be. Here in the UK, this is a particularly poignant issue because of the poor quality of "debate" around Brexit a few years ago.
Now, to answer your question, here are a few of the different barriers a new tech business would face here in the UK right now.
1. It's been difficult-to-impossible to open a new business bank account for the past several months. The big banks have (they claim) been so busy administering government support schemes for existing business customers that they couldn't take on any more. Government have been mostly ineffective at dealing with this problem.
2. To hire anyone (other than owner-directors, when some of this might not apply) means drawing up employment contracts with all the required elements, establishing formal grievance and disciplinary processes, being aware of numerous employment regulations, arranging all required insurance policies, identifying what evidence you need to keep to confirm a candidate's legal right to work for you, understanding any relevant minimum wages and time off including many kinds of statutory leave and pay, understanding your health and safety obligations including things you must say/provide/fund for your employee, establishing a payroll system and integrating that with the government's real-time information system if you haven't already done this, setting up a compliant company pension scheme if you haven't already done this, and who knows what else because this sentence is already half a screen long.
3. All of your personal data processing needs to be GDPR compliant. Its defenders like to say this isn't a big burden because it "just" means you have to do a few reasonable-looking things they can type out in a single comment. However, the main GDPR document alone is nearly 100 pages long and that's before you consider all the supporting material and the views of 28 different regulators. One of these things is not the same scale as the other.
4. If you're selling B2C, the consumer rights rules will apply. Again, on the face of it, that's fine. Who can object to fair protections for consumers, right? But when you actually read them, they are full of things that aren't well considered, like defaults that probably no-one would ever want, long and highly context-sensitive lists of information that must be provided at different times, obscenely disproportionate penalties for minor infractions by merchants, etc.
5. VAT. I'm not going to elaborate much, though I could write a pretty long book on the subject at this point. You're welcome to Google the numerous extensive criticisms out there. I suggest starting with #vatmess. Pay particular attention to how the EU changed the rules so what used to be a single market where merchants treated customers anywhere in Europe the same as in their home country got turned into a situation where merchants had to understand and comply with the tax rates and rules in every one of 28 member states. This is literally the opposite of the EU promise of creating a single market.
6. The IP landscape is unclear. Attempts to standardise it have repeatedly failed. No-one really knows what you can or can't get a patent for, or even what types of inventions you can or can't get a patent for. Copyright rules differ significantly with geographical location, and in some places additional related rights exist.
7. Lots of relatively minor stuff like the "cookie law", which is a tiny and yet totemic issue. It was well-intentioned but written by people who didn't really understand the technology and its implications. It doesn't do much to protect anyone. It annoys almost everyone. Non-compliance is widespread, whether deliberately or through simple misunderstanding or ignorance of what is technically required. There is little enforcement in practice, so operators who do make the effort to comply are left at a disadvantage. And years later, all of this still hasn't been properly fixed even though just about everyone agrees on it.
Edit to add:
8. How could I forget PSD2/SCA? There's nothing like putting obstacles in the way of actually collecting money from your customers to help a business grow.
In the US there are multiple turnkey schemes for #2, though, albeit at some cost. Is there a gap in the EU?
You can certainly get software that handles things like payroll and statutory leave. Using it has become a practical necessity anyway since governments like the UK's started requiring payroll data to be filed electronically using approved software built on top of their API.
IMHO, the problem with becoming an employer for the first time is that there are so many things that an employer is now required to arrange that even if they are individually quite reasonable the cumulative effort can be a deterrent.
For example, if an employee at your tech firm uses a display screen, you must arrange and pay for an eyesight test with a suitably qualified professional if they ask for one. You must also pay for their glasses if they need an extra prescription specifically for display screen use, but you don't need to do this if their ordinary prescription is already suitable.
While you're dealing with H&S issues, don't forget to conduct your suitable and sufficient risk assessment for each new employee who is going to be working from home during the pandemic restrictions and then make any changes needed so they can do so in a safe and healthy way, whatever any of that actually means in practice.
The list of things you're automatically responsible for the moment you become someone's employer is pretty long in my country, and if you want to get it even close to right you'll probably end up dealing with lawyers, accountants, insurers, pension providers, HMRC, anyone who makes related software you now need to use, and from time to time possibly others like medical professionals.
As far as I'm aware, the closest thing to a turnkey solution that covers all of this is engaging an HR professional, presumably on a consultancy basis since you hardly need one full time if you're a bootstrapped startup looking for employee #1. But then that's more cost to deal with, and it's still going to take considerable time for one or more of your founders to make all the necessary arrangements even if you've brought in an expert to tell you what those arrangements need to be.
Now combine this with self funded companies, and 1 bad hire can kill your company
yup.
Many different rules in eu countries, fscked up tax rules for companies trading with foreing customers, high taxes for relatively well paid tech workers, and high cost of entry into the business is killing european businesses.
Even starting a business is hard... I hear a lot of people from USA who (eg.) find a old t-shirt printing press in a yard sale, and start their own t-shirt printing business, fill out some forms, sell 7 tshirts in two years, mostly to family, and then stop doing it. Just being able to letally sell a t-shirt in many eu states will cost you thousands and thousands of euros, where it's just not worth it to start. Wanna make an app by yourself and host the backend on a $5 digitalocean VM? Sure... but do it for free. Want to earn something? If you have just a few dollars of income, it's not worth it... you need a lot of users paying you a lot of money to pay the government fees, even if you work for free.
It's insidious, yes, but also what if foreign competitors gain a competitive advantage due to fewer regulations?
They will still need to follow EU regulations, but they gain R&D momentum locally.
The only solution I see is to bar foreign companies that do not adopt EU regulations locally too - e.g. a self-driving car developer that does not need to follow safety regulation as strictly locally.
This is about 27 separate national governments to apply separate regulatory procedures, rather than just having Ireland's current gdpr enforcement. That's not necessarily bad, but it is more bureaucracy.
The problem is that the EU invests. Small businesses are taxed to death and swamped with bureaucracy. From that you can clearly see where this is going.
The bigger issue is that the US has a massive advantage, in that a US tech company can launch in one language (their native language) to 300+ million potential customers, and hire from the same pool with minimal bureaucracy (the laws are largely the same, and at least written in the same language, ID and visa requirements are the same, payment providers are mostly the same, etc.)
In Europe on the other hand, to launch even to other countries in the EU involves a lot of translation work. Then taxation varies a lot, and the laws are in different languages so you'll need local lawyers and a local tax office to hire employees there, etc. - on the employee side, the ID and visa requirements vary a lot too, so you'll need local specialists / relocation companies to help with that. The payment providers also differ a lot, e.g. with Sofort-überweisung in Germany and the lack of online card payment options there (until recently), etc.
And then there's the extra EU regulations - the GDPR, cookie consent laws, age verification laws for video content, link tax for aggregation services, etc.
But I still think the best solution in the short-term is protectionism. Give European companies a bigger advantage in Europe by not sourcing from foreign corporations (especially for critical infrastructure like public services), and invest in FOSS and development companies around that (where smaller companies could work together on FOSS projects).
Otherwise the US companies just dominate, and then use their dominant position to get a monopoly through bribes and threats (see Microsoft in Hungary and Munich for example). Then they pay no taxes in the EU, take all the profit back to the US and use that to crush EU industry even further - just like how in the past natural resources were plundered from colonies, but all the skilled industry was kept in the coloniser countries.
No, I can't see how taxes are to blame. Taxes are not signficant concern for most startups.