European tech has a self-confidence problem. Launched in late August by Stripe CEO Patrick Collison and former Italian PM Mario Draghi, the ‘Rhine Group’ opens its short initial manifesto stating that of “the fifty largest technology companies in the world, only four are European. In every emerging technology that will shape the coming decades, Europe is weak.” It doesn’t get much more positive than that. The compellingly rich Europe 2031 story-scenario, also published recently, is a similar tale of decline, fast-forwarding five years to a point where the continent has unrecoverably lost the “race” on AI.

Common to both is an attempt to shake Europe out of a complacency which, in their view, has failed to deliver tech-led growth of the scale that is necessary to keep pace with the US and China. But while both are intended to create positive course-correction among European business and policy, they rest on a piece of intellectual scaffolding that is hindering the very progress that their authors advocate — an obsession with Silicon Valley.

This obsession is not just depressing but counterproductive, as it traps us in an analytical framework that steers us towards attempts to copy US tech rather than design our own ecosystem — with all of the quirks of Europe baked into it, good and bad. We are indulging a trope that is there to keep European tech ‘in its place.’

Part of pushing back on this means analysing the raw data. In its annual State of European Tech report, Atomico does an exceptional job of unpacking the scale and progress of our ecosystem year by year, measuring start-up growth, investment volumes, exits, talent density and more. Europe’s tech sector has seen four-fold growth in a decade to a current value of almost $4tn (though impressive, still behind the US’s sevenfold increase in the same period). But for those determined to lean into European declinism, this fact base is inconvenient and ignored.

Then there is the debate about European policy, where there is full submission to the idea that Europe is hopelessly lost. This needs countering most of all.

First, the “Europe regulates while the US innovates” meme is not really true. In most sectors, including financial services, healthcare, energy and food, the US regulatory framework is nightmarishly complex, even at a federal level. And then, on most issues, each state has its say, and often its own bespoke framework — even down to company law and taxation. You need armies of lawyers and lobbyists to get anything done, as the crypto industry will attest.

One example is the laudable EUInc. campaign, which aims to solve, among other things, fragmented company law in Europe. It is cast as the ‘Delaware C-corp for Europe.’ But Delaware’s state court recently made changes that caused venture capital giant a16z, among others, to switch to Nevada. If something like that had happened in Europe, it is all we would talk about on conference panels for the next year.

Second, where regulation may be lighter in the US, it does not mean limitless scaling with no liability. The risk of doing something wrong — in particular, the kind of consumer harm that most regulation is there to prevent — is simply transferred from the regulator’s office to the courtroom. Litigation replaces regulation, and so you are back to the army-of-lawyers problem. Deep pools of capital are needed to fund courtroom battles and the inevitable settlements. Meta has just been ordered to pay $18bn, or 9% of its 2025 revenue, in a lawsuit over child safety allegations – far more than the 6% of global turnover that the EU can fine firms under the Digital Services Act, a regulation much-derided by US tech commentators. The fact that the US start-up market has grown to live with this might be admirable, but it has done so in spite and not because of the American regulatory system.

Most importantly, the trope keeps Europe as an eternal apologist for its regulatory instincts. It prevents Europe from re-casting the way it goes about rulemaking as an asset as opposed to a drag.

Perhaps the best example of this is the EU AI Act. Millions of Twitter impressions have been earned by mocking the EU for being quick to pass legislation on AI. Others, often in Europe unfortunately, take the argument further and portray Europe’s lag versus the US on AI start-ups (and particularly frontier model developers) as a direct result of the AI Act.

Never has a convincing account of the causation been given: because there isn’t one. Most tech commentators, particularly in the US, have a vanishingly thin understanding of European policymaking: enforcement of the majority of the more significant rules in the Act has not even begun, so how can the Act be the cause of Europe’s problems? Meanwhile, as Geoff Mulgan has argued, China “has some of the toughest laws on algorithmic and software vulnerability disclosure while also pioneering the ultra-cost-efficient LLM DeepSeek.” Even Mistral’s CEO, Arthur Mensch, has softened his early criticism of the Act and cited market fragmentation and a lack of ambition to embrace AI as the bigger issues. Indeed, in the UK, we do not have AI legislation yet likewise have failed to produce a frontier model developer of the scale of Mistral.

Yes, policy contains signals, and vibes matter. Jumping to regulate is an instinct of the European Commission that Draghi was right to call out. But let’s stop pretending that Europe’s position in tech, including new capabilities like frontier AI, is because of the AI Act. Instead, we need a positive, ambitious account of how Europe can leverage regulation as an asset for the future of its tech ecosystem.

Original photo by Nils Huenerfuerst.