It has the knowledge workers but not the capital or laws that make it attractive for them to build tech firms.

Many US tech firms would be either illegal to operate in the EU or legally very difficult. Any social network is a problem to operate in the EU because you are considered fully liable for the speech acts of users regardless of company size.

Now look at web search, YouTube, social media, messaging apps, cloud... they all involve reproducing the speech of users at scale without pre-moderation. So you just can't operate them in Europe without endless legal problems and costs that make you uncompetitive. Even operating something like Hetzner is hard!

So if the EU continues picking fights with the US and access is lost, who in their right mind would sign up for the multi-decade effort to compete with them? It would be an endless nightmare and there's really no point. The EU Commission has absolutely no institutional will or ability to compete with the US in tech or service markets, meaning the EU will absolutely blink first. They are all Outlook and Netflix addicts, all it will take is their wives/husbands/children bitching about how they suddenly can't use the App Store and they'll fold quickly. So anyone dumb enough to try and build up a business that competes with the US firms purely by being EU-homed will get immolated the moment the EU gives up and submits to what the White House wants, which they are 100% guaranteed to do.