Germany especially does not want startups to exist, they want to have companies which are large and succeed over the long term. The employee protection laws in Germany (which are often praised on this site) make it extremely hard to run a startup without violating the law. E.g. if you want to employ someone you need to pay their healthcare and pension insurance. They can't work for more than 10 hours a day, no this doesn't mean you aren't allowed to compell them, you have to actually stop them if they wanted to. How do you build a product while figuring out that bureaucracy?
The European model will succeed if and only if those large corporations are actually able to innovate at the same pace as American or Chinese companies. Which currently looks very unlikely.