There is a lot of innovation happening in Europe, it is just that Europe is better in small and medium businesses than startups that become unicorns and tech giants. Interestingly that has always been the case, so it isn't even a recent development. For example while Ford is known to have invented the assembly line, in Germany it is the car supply industry that always came up with innovations and the car manufacturers then just put the components together to make full cars (sure, this is a simplified view). So there are some large companies, some of which are known and very successful worldwide, but they are not usually thought of as innovators. Large companies in Europe don't take real risks, so it falls on small companies that do that with limited funding. It's just a shape of the economy that Americans have a hard time to wrap their heads around.