I'm not anti-France and I'd ask the same question of my own country, the United Kingdom.
If the social security allows you to start your own company, and if people are cheaper, and cost of living is lower, then why can't Europe produce a Google, Facebook, Apple, Oracle, Microsoft?
Market size, for one. Europe is not a country, and startups begin on a small national market, or at least national-scale funding.
So you have to accelerate to massive scale across Europe, and then conquer the US market before a US company conquers the US and spreads across Europe. It's clearly a far more difficult proposition for the European company. The only alternative I can think of that might work, is for European companies to start with targeting the US market first (a challenging concept in its own right - to target a foreign market first).
I wonder how much it has do to with education and research. The US have been ahead of Europe in the computer sector. For instance, when Google was founded, were there competitive research teams in Europe working on this type of technologies?
Actually, I graduated around that time in a high-ranked French engineering school, and I think our CS classes were pretty weak (at the master level).