Germany's AI strategy: Closing the gap with the US and China

Trustworthy technology. Industrial data. European cooperation.

These are the three key pillars of Germany's plan to catch up in the global race for artificial intelligence (AI).

Around the world, breakthroughs in the field are transforming entire industries. Yet none of the leading AI technologies have been developed in Germany. Instead, applications from a handful of companies in the United States and China dominate the global market.

"The reality is that too little has happened for too long," said German Chancellor Olaf Scholz at the German government's Digital Summit in Frankfurt, an annual gathering of politicians, business leaders and civil society. And yet, "a swan song is completely inappropriate, because the strengths of our country — creativity, innovation and hard work — remain strong today," Scholz added.

In Frankfurt, members of his coalition government, which includes Scholz's center-left Social Democrats (SPD), the environmentalist Greens and the neoliberal Free Democrats (FDP), outlined their plan for Germany to remain competitive in the global AI race. Their medium-term goal is to achieve "technological sovereignty", that is, independence from foreign tech giants.

The big question now is: Will their strategy succeed?

German: Strong in research, weaker in applications

Research into artificial intelligence — computer programs that autonomously perform tasks that previously required human intelligence — dates back to the mid-20th century, with German researchers often at the forefront.

Today, AI is experiencing a new hype, driven by the proliferation of programs like ChatGPT that seem to generate convincing text, images, or code out of thin air.

But the fact that none of today's leading AI applications have emerged from Germany once again highlights the country's ongoing challenge, analysts say: that its strong research record rarely translates into the development of cutting-edge applications.

One reason, said Scholz in Frankfurt, is that many companies, especially as they grow, struggle to access the venture capital needed to scale. To achieve "technological sovereignty," Scholz emphasized the need to mobilize more investment: "This is the only way to turn innovations into new business models here in Germany."

AI's popularity boom

Nevertheless, there is progress in Germany, according to a new study presented by the industry association Bitkom in Frankfurt. Not only do people in Germany increasingly see artificial intelligence as an opportunity rather than a threat. The study also found that 20% of companies surveyed have now integrated AI into their operations, an increase of six percentage points from last year.

This progress is due in part to publicly funded initiatives such as the Future Center for Human-Centered AI in Production Work, known by its German acronym ZUKIPRO. The organization of researchers, technicians and trainers offers free AI consulting to small and medium-sized industrial companies as well as skilled workers such as butchers, carpenters and goldsmiths.

"Above all, companies hope to reduce costs and improve efficiency," Estella Landau of ZUKIPRO told DW. It's also about overcoming fears of the new technology, she said.

"Many companies are interested in AI, but they don't know exactly what to expect. They are uncertain and looking for guidance."

US dominance

At the same time, the majority of AI applications used by German companies still come from US providers such as Microsoft and Google, raising questions about how this contributes to Germany's goal of becoming more independent.

"It's a medium-term strategy, and it doesn't mean that we're there yet," admitted economy minister Robert Habeck in response to a question from DW. However, he noted that since the start of Russia's invasion of Ukraine in 2022, awareness of the importance of technological sovereignty has increased significantly in both industry and politics. Against this background, his ministry has observed that "European and German technology is making progress."

Habeck highlighted the use of industrial data as another key component of Germany's AI strategy. "German companies are sitting on a treasure trove of data," Habeck said. This would allow the country to play a leading role in the next big wave of AI, he said, and develop new systems that can take on increasingly specialized tasks.

Cooperation at the European level is also crucial to this, Habeck said.

"Germany's data volume, even if it is strong, will still be too small on its own. We have to find a European approach."

European collaboration

As part of a broader European strategy, Germany aims to become a global leader in the development of "trustworthy" AI—  technology that rigorously respects fundamental user rights and should therefore inspire greater trust than applications from overseas manufacturers.

One of the most important measures is the EU's AI Act, which came into force on August 1,2024. It is the world's most comprehensive set of laws on artificial intelligence and imposes particularly strict regulations on high-risk AI applications. Industry representatives in Frankfurt stressed that it is now critical for companies to clearly understand which rules apply to them and which do not.

German government officials in Frankfurt offered reassurances in this regard, while stressing that this approach is essential to remain competitive in the global AI race.

"We have to pursue a different strategy than the American companies," economy minister Habeck said.

This article was originally written in German.

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