German companies lagging digital peers

style="float: right; margin-bottom: 10px; font-weight: 600;"Fri 19th Feb, 2021

It's hard to imagine a typical workday in Germany without digital technologies from abroad. Video chats via Microsoft Teams or Zoom, planning via Google Docs, using laptops and smartphones not made in Europe. In 2019, even the federal government had to admit to being "highly dependent" on the US company Microsoft. Even during the pandemic, states had to recognize that they rely heavily on cooperation with tech corporations such as Google and Apple, for example, to develop Corona apps.

The digital association surveyed 1,100 companies from various industries: 100 percent said Germany needed to gain more digital sovereignty. This was the result published by the digital association Bitkom on Thursday. 94 percent of companies say they rely on imports for digital technologies, while only two percent do not import any digital products. Almost half even believe that Germany will not be able to catch up with the technological lead of other countries and that Europe's digital dependence will continue to increase in the coming years.

"In recent decades, we have lost ground in some areas, but that doesn't necessarily mean it has to continue," says Bitkom President Achim Berg. "If we make the right decisions now and specifically promote key digital technologies, we can initiate the turnaround." He has high hopes for the Gaia-X cloud project, which is being driven forward at European level.

Cloud computing means that large volumes of data no longer have to be stored on a company's own computer or computers, as was previously the case, but instead are transferred via the Internet. Gaia-X is intended to network European providers and thus offer alternatives to US corporations. In addition, the cloud offerings in the Gaia network are supposed to be more secure, since data is protected from possible access by US authorities, for example.

Dependence on non-European companies is also a political problem. 14 percent of participants see a fundamental danger that their company could be blackmailed by foreign business partners or governments. A large proportion of respondents would like the German government to prevent Germany's infrastructures from falling into the hands of non-EU companies.

At the same time, there is currently even a debate in federal politics about whether the state should purchase a cloud infrastructure based on the Microsoft Azure stack for the next few years. While the Federal Ministry of Finance (BMF) is pushing for this, the Ministry of the Interior (BMI) in particular wants to put the brakes on and sees the digital sovereignty of the federal administration at risk.

In order not to continue to be dependent on foreign countries, Germany itself would have to make strong technological advances. The respondents call above all for investments in IT security technologies, artificial intelligence and 5G. The digital association Bitkom suggests not funding too many different projects for this purpose, but rather "defining selected research and funding priorities for key digital technologies and making them strong." These projects should be pursued jointly at European level.

Yet, few are talking about the reason for Germany's poor competitiveness in the digital market. The software engineers are there, the technology is there, the will is there... but so is the bureaucracy. Go to Silicon Valley and compare creating a tech startup there to creating one in Germany. In Germany the bureaucrats are traditional and slow and make small business owners jump through hoops. At any moment the Finanzamt, which is largely unaccountable to those without the money to fight it, can garnish your business bank account if you fail to dot the i's and cross the t's in some obscure form. Until Germany emulates the US's streamlined approach to innovation and business practices, it will be looking to the US for solutions that are actually already capable of being produced within Germany's own borders, but which will be locked up in a bureaucratic cage.

Image by Gerd Altmann


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