There are lots of theories.
One of the main ones is that national policies around employee equity vary throughout Europe and are often severely disadvantageous (particularly Spain and Germany). Lots of European entrepreneurs are calling on policy makers to both normalize this within the EU, as well as making the policies competitive (e.g., [1]).
Of course that statement misses some of the “why not ”. The tax treatment in other states is the same, and several have similarly employee friendly policies. If anything, Seattle has become a clear rival to San Francisco, and has restrictive employee policies with regards to non competes (c.f., Microsoft used to sue high profile transfers to Google, Amazon sues ~everyone who leaves AWS, etc.).
I think the combo of those things suggest that it comes down to density and freedom of movement. Silicon Valley leapfrogged other places thanks to Shockley => various forks => Intel, Apple and others offering serious equity (the Boston scene didn’t keep up on this front). That fed on itself over and over again, leading to persistence. Seattle is now a powerhouse as a legacy of Microsoft and then Amazon, and all the folks that have come out of it.
By contrast, Europe has only had a broad single market for
~30 years. But it’s still super fragmented both in terms of laws and some would argue more importantly by language. 45 years ago when Apple and Microsoft were founded, they were able to hire any engineer in the US (and beyond) that spoke English. By contrast, most European companies were highly national with fairly minimal migration between countries.
Europe is closer now to the conditions of the initial Silicon Valley setup (freedom of movement, access to knowledge, everyone speaks a common language), but its decades behind in terms of a history of successes. I believe that the companies spawned from Spotify employees, and so on will spread throughout the European startup scene. But it still takes time.
tl;dr: Europe still has some structural barriers, and just a much “younger” startup scene.
Edit: plus it’s always important to remember that post WW2, most of Europe was spending its time recovering from the war.
[1] https://notoptional.eu/en/policymakers