The European Union needs to "reform and forge a true digital single market", Schmidt said, attacking the red tape involved in getting 28 member states on the same page.
"If regulatory barriers are removed, start-ups could directly access half a billion European consumers, a market that's larger than the US, where technology companies have the ability to achieve scale before they expand internationally," he said.
Crucially, the EU could reduce unemployment still running at near record highs by promoting the new businesses which offer so many opportunities, he said in a piece written as part of a series at the EU's invitation by Internet leaders on how to create a new Europe.
"Europe must encourage the risk takers," Schmidt said. "Entrepreneurs emerge more readily in cultures where risk taking is encouraged."
He cited calls to regulate the controversial car pick-up service Uber, the San Francisco-based firm which allows passengers to call a cab on their smartphones at prices that significantly undercut traditional taxi companies.
The EU has been investigating Google since 2010 on charges that it abuses its dominant position in the Internet search market to put its much smaller competitors at a disadvantage.
The company has offered Brussels a series of remedies but the last deal, which initially got a positive response from EU Competition Commissioner Joaquin Almunia, ran into trouble this month when he called for "new solutions" to address fresh complaints from rivals.
(Also see: EU Competition Regulator Seeks More Concessions From Google to End Probe)
In February, Google had agreed several steps, including giving equal prominence to rival services in its search results in the hope of avoiding fines potentially worth billions.
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