Google's internal response[1] covers it inadvertently. They show stats for various European markets with competition in the shopping category, mostly with other American companies.
While it would be nice to get the VAT problems sorted out, this is second to the problem of there being a couple dozen different languages being used in the EU. People shop domestically because they can use websites in their native language and when they have problems, can talk to customer service representatives in a language they understand.
It is really, really hard to get your service localized in couple dozen different languages (let alone provide actual customer service in all of them).
Even Amazon handles only a part of Europe, and if Amazon can't do that, what companies can? There are a few, but not all that many, and for many it isn't worth it, because your economies of scale quickly disappear when you have to build and maintain a separate presence in up to 28 different countries that mostly speak different languages. (That includes American companies, too, by the way, many of which simply choose to ignore Estonia or even Sweden and Portugal.)
That is a big enough user base to have a successful business for most general retail without requiring cross borders.
If you look Amazon is most active in foreign countries with English as a first language, that's not a co-incidence it's simple cheaper to do business.
Also, many of these people in these countries speak several languages already because of the close proximity and business with each other.
You can get away without offering this for some types of products and services, but remember that you are competing with local vendors who do.
And yes, of course, there are other issues, such as shipping overhead (for anything that involves physical products) and payment method preferences. But language on its own is already a significant obstacle towards exploiting economies of scale beyond the national level.
Yes, but search is very low on the list of industries where that matters.
Plenty European internet companies have trouble getting outside their founding country, sure, but the trouble is language, culture, lack of a unified media landscape, etc, not VAT rules. Anybody who tells you different is just trying to find a scapegoat for their inability to execute cross-culture.
This indeed makes Europe a more difficult starting point, but good luck fixing that with politics.
Not to mention the fact that before the digital age, when all international commerce actually involve moving physical goods across physical borders, Europe had no problem scaling up to multinational corporations.
European giants are largely hold-outs from a different age[1] (full article[2]). The decline didn't start with the Internet.
[1] https://media.economist.com/sites/default/files/imagecache/2...