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Everything wrong with Europe’s tech scene, according to the ex-CEO of Google

eric schmidt google alphabet executive chairman ceo
eric schmidt google alphabet executive chairman ceo

Axel Schmidt/Getty Images

Eric Schmidt has a problem with Europe's universities. And its regulators. And its tax policies.

The former Google CEO, who now serves as the executive chairman of Google parent company Alphabet, appeared at the Startup Fest Europe conference in the Netherlands on May 24, discussing everything from artificial intelligence to Google's new chat app, Allo — as well as Europe's regulatory environment.

Google is currently the subject of antitrust investigations by the European Commission over alleged anticompetitive practices relating to Search and Android, and could face billions in fines.

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Asked by CNBC interviewer Julia Chatterley about the problems facing Google-linked venture-capital firm GV, Schmidt said there are "lots of issues in the European Union that have to get addressed" — and went on to list what he perceives to be the key problems holding back the continent's tech scene, from education to legislation.

"Let's start with the universities in Europe. We hire incredibly smart people that come out of the European universities. Universities themselves are underfunded relative to the American universities, by a lot."

Schmidt, who served as CEO of Google from 2001 to 2011, also has an issue with European red tape. "There a zillion laws that still make it difficult to be an entrepreneur, right. It's still much harder to be an entrepreneur in Europe than it is in the US — both in a regulatory [sense], tax policies, the amount of time it takes to create a firm, and so forth and so on."

He added: "What happens when I meet with governments is they all say 'yes,' and they listen very politely. They're always very nice. Europeans are always very polite. And then they don't do anything about it."

European Competition Commissioner Margrethe Vestager Google Antitrust
European Competition Commissioner Margrethe Vestager Google Antitrust

Axel Schmidt/Getty Images

Schmidt is calling for Europe to encourage a more risk-taking business culture, with less interference from regulators.

"There is a model for entrepreneurship. It requires risk, capital, serious investments in the universities, and then sort of tolerating the crazy ideas of the young people coming out of it, giving them some seed funding, letting them do it, and getting out of their way.

"This model works. It's created this extraordinary wealth in America. It is repeatable in Europe, without question."

Of course, there is significant bad blood between Google and Europe. Regulators are concerned about the search and mobile giant's perceived dominance on the continent. Google has a whopping 90% of the desktop-search market, and its Android mobile operating system is behind 75% of smartphone sales in the top five European markets.

The European Commission has accused Google of breaking EU law by abusing its dominant position with Android (which Google disputes), and it may face a record $3 billion antitrust fine for its behaviour on search.

Little wonder that Schmidt wants Europe to go easy on tech companies.

Here's a transcript of Eric Schmidt's thoughts on the European tech scene and the regulatory environment. You can watch his entire interview at Startup Fest Europe below.

Chatterley: What are we getting wrong?

Schmidt: Well it just takes time. There's lots of issues in Europe that have to get addressed.

Chatterley: Like what?

Schmidt: Let's start with the universities in Europe. We hire incredibly smart people that come out of the European universities. Universities themselves are underfunded relative to the American universities, by a lot.

There are a zillion laws that still make it difficult to be an entrepreneur, right. It's still much harder to be an entrepreneur in Europe than it is in the US — both in a regulatory [sense], tax policies, the amount of time it takes to create a firm, and so forth and so on."

What happens when I meet with governments is they all say 'yes,' and they listen very politely. They're always very nice. Europeans are always very polite. And then they don't do anything about it.

So if you want to do something — I'm serious, right — there is a model for entrepreneurship. It requires risk, capital, serious investments in the universities, and then sort of tolerating the crazy ideas of the young people coming out of it, giving them some seed funding, letting them do it, and getting out of their way.

This model works. It's created this extraordinary wealth in America. It is repeatable in Europe, without question.

Chatterley: You're basically saying we're all talk and no action.

Schmidt: Well those are your words ... the fact of the matter is we hire thousands and thousands of Europeans because they don't have startups they would go to. And these are phenomenal engineers working for Google in Europe. I think Europe could benefit from having more, more, more of this.

Now we've seen a big change in the last few years, but it's taking too long. It's time to accelerate this.

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