Big companies means efficiencies of scale. Small companies that succeed and grow inevitably become big companies. If they don't, it means the qualities that make them effective don't scale to the rest of the economy.
They become big but not necessarily huge - like the 10 biggest tech companies that people here put as the benchmark. For that one needs organizations that also continuously increases their scope - going into new markets, consolidating exiting markets, buying up existing players. And if they are to continue being "European" then they must resist being bought up by the huge US or global tech companies. The latter is a big problem at least here in Norway. We have some companies that grow quite big and successful - but it is generally just a question of time before they get swallowed by a huge corp, often with US headquarters. Example: Atmel, now Microchip
Yep, that's a huge problem, and one that isn't easy to fix. The European market is vastly more gragmented than the North American one, so even without Europe's penchant for taxes and regulation, North America can more easily get giant companies that can reach across the Atlantic.
The only real answer is protectionism, and there's a good chance that'll hurt more than it helps.
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