Insights

Author: Wilfried Platten, editor and IT expert at the Munich PR and communications agency PR-COM, which specialises in high-tech

Germany may have been the world export champion not so long ago, but we are not the digital world champion – and probably never will be. Global digital market leaders such as Amazon or Alibaba either come from the land of opportunity or from the Middle Kingdom. Sheer size therefore seems to be an important prerequisite, as are lavish start-up budgets and an unwavering belief in progress in combination with the crazy development dynamics of digital hotbeds such as Silicon Valley or Shenzhen, which attract innovative minds from all over the world. This is not the way our country is knitted. But is it really that simple?

For years, Germany has been considered a lame duck when it comes to digitalisation, government-led projects such as Gaia-X have been unsuccessful and the Online Access Act has been a dismal failure. German companies, institutions and authorities are equally afflicted by the digital growth inhibitor and are in danger of being left behind. It could be due to government (over)regulation, as the examples show a strong bias on the part of the public sector. But perhaps it is also the case that Germany has perfected values such as ingenious brilliance, sophisticated product quality and ambitious productivity over many decades, which are less and less in demand in the digital age, but which are hard to say goodbye to. In the digital machine room, on the other hand, time-to-market is the trump card. Vision, experimentation, a start-up mentality, learning-by-doing, trial and error and successive optimisation in the hands of the customer are required here. This means that the very qualities that have been perfected over decades are standing in the way of digitalisation. In other words, we have a lot to lose. And those who have a lot to lose risk less.

Unequal competition

For decades, the typical economic structure characterised by small and medium-sized enterprises was also considered one of the most important success factors for Germany’s status as a world export champion. In the digital economy, this becomes a structural disadvantage. Instead, the motto here is: ‘Think big!’ And this creates another problem. The larger and more globally positioned a company is, the easier it is to access state meat pots and the more efficient the tax avoidance strategies are. For years, the EU has failed to rein in chronic tax evaders. Digital corporations such as Meta, Microsoft or Booking pay proportionately less tax via escape corridors such as Ireland, Singapore or the Netherlands than an IT system house in the southern Eifel, provided it has not yet emigrated to Luxembourg. So there can be no question of fair competition on an equal monetary footing.

Added to this is our contrasting attitude to data utilisation. While the unscrupulous multiple analysis and utilisation of the resulting data represents the core of digital business models, the mantra of data economy through privacy by design applies in Germany. It states that applications must be designed from the outset in such a way that only the absolutely necessary personal data is collected during data processing, among other things in order to realise the right to informational self-determination. This is not an exciting environment for digital champions, regardless of whether one considers this civil privilege to be right or wrong. Seen in this light, the attempts to tame the digital economy are preventing it from being successful here as a domestic economic factor worldwide. We use data-driven business models billions of times as customers and trust in good faith that Alexa only listens in our living rooms and bedrooms when she is called. At the same time, however, we do not want to accept these business models as part of the domestic economy precisely because of their data fixation – one of the many strange contradictions between lofty aspirations and harsh reality.

Hope from the supermarket

Artificial intelligence is exacerbating Germany’s precarious situation when it comes to digital technologies of the future. The balance between innovativeness, risk assessment and value orientation no longer seems to be right. A glimmer of hope comes from the food retail sector of all places. The Schwarz Group, which includes discounter Lidl, has successively built up a small IT empire along the lines of Amazon: first IT resources for its own use, then expansion into a hyperscaler for cloud services. And an AI campus is currently being built near Heilbronn, where Heidelberg-based ChatGPT competitor Aleph Alpha will also set up shop. Perhaps this is the nucleus of a German Silicon Valley.

However, concerns and regulatory intervention are still booming, while competitiveness is increasingly suffering. So it’s not just about a German Amazon 2.0, but about the fundamental question of what kind of economy do we want – and above all need? What must the legal and political framework, the funding and ultimately our attitude towards innovation culture look like for it to be successful? The answer to this question will be exciting. One way or another, however, we will probably have to say goodbye to the ‘world champion’ label for the foreseeable future.