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3 ways Germany wants to claim tech leadership

November 21, 2023

As emerging technologies like artificial intelligence transform industries, Europe's largest economy is eager to catch up with the US and China. Will it succeed?

Technology for testing components used in computer chip manufacturing by Jena-based photonics company Jenoptik, showcased at the German government's 2023 annual digital policy summit.
Jenoptik's cutting edge technology was showcased at the government's digital policy summit.Image: Janosch Delcker/DW

Germany is poised to compete in the global race for technology — but the country needs to pick up the pace.

That was the message Chancellor Olaf Scholz delivered to an audience of lawmakers, industry leaders and civil society representatives gathered in the city of Jena during a two-day digital policy summit.

"We need to accelerate our efforts," Scholz, a member of the center-left Social Democrats, said during a panel discussion Tuesday afternoon.

As emerging technologies such as artificial intelligence and quantum computing reshape the global landscape, Germany — long known as a stronghold of innovation and engineering expertise — is struggling to keep pace with global competitors.

Faced with a shortage of skilled workers, bureaucratic hurdles and a history of comparatively low investment, Europe's largest economy is lagging behind competitors such as the United States and China.

But Berlin is determined to reverse the trend. "Things are moving forward," Scholz said.

Here's how Germany wants to achieve that.

Push data access

A critical factor in the global race for technological leadership is access to data: Many of today's cutting-edge technologies, especially AI, rely on vast amounts of data. 

This has been a challenge for companies and researchers in Germany, a country known for its strict privacy regulations, where the world's first data protection law was passed in 1970.

Berlin has launched several initiatives, such as Marispace-X, a joint effort by German companies and research organizations to collect and share data about the world's oceans.

autonomous surface vessel
An autonomous surface vessel for collecting maritime data was presented in JenaImage: Janosch Delcker/DW

Another recent initiative is the establishment of a national data institute. The new institution aims to develop practical use cases for sharing data in areas ranging from energy consumption to the impact of long-COVID.

But a year after these projects were first presented to the public, progress has not been as fast as expected, warned Aline Blankertz, a policy and public sector advisor at the nonprofit Wikimedia Germany.

"Often things get bogged down in questions of responsibility and legal issues that take a long time to resolve," Blankertz told DW.

Spearhead ethical technology

At the same time, Germany wants to turn its commitment to privacy into a competitive advantage.

In line with a broader European Union strategy, it wants to lead the way in creating "trustworthy AI" that adheres to strict standards and ethical principles. This, officials hope, will give German AI technology an edge in a market increasingly concerned with privacy.

But as the EU finalizes its "AI Act," the world's first detailed AI rulebook, German Economy Minister Robert Habeck also cautioned that excessive regulation could stifle innovation.

"That's why we have to make sure that we regulate specific applications and not the technology itself," Habeck, a member of the Green Party, said during a panel discussion.

His warning was echoed by Nicole Büttner, CEO of Berlin-based AI startup Merantix Momentum.

"We're not against regulation per se, we want some regulation — but we have to let the technology develop and grow first," she told DW. "And if we overregulate now, the technology won't develop here at all."

Aline Blankertz
Policy advisor Aline Blankertz says progess is hampered by legal issues that take a long time to resolveImage: Janosch Delcker/DW

Find tech talent

And there's another pressing issue that dampened enthusiasm in many of the discussions at this week's conference: Germany's shortage of skilled tech workers.

With venture capital on the rise, startups in the country may find it easier to raise fresh money than a few years ago. But they often struggle to find the right people to fill open positions. At the end of 2022, digital industry association Bitkom warned of a shortage of around 137,000 IT experts across all sectors. Since then, the situation has worsened, Bitkom board member Ralf Wintergerst said at a press conference.

Entrepreneur Nicole Büttner agreed. "The problem is real, both for start-ups that want to grow and for medium-sized companies that need people, as well," she said.

The move by some German IT companies to outsource work to countries like Ghana is not a long-term solution to the problem, she added. Germany also needs to attract tech talent from abroad and simplify the visa application process, which in the past has often been plagued by bureaucratic hurdles.

Recognizing this, Berlin overhauled its skilled immigration law earlier this year to lower barriers for skilled workers from outside the EU.

"We now have the most modern immigration law in the world, which can compete with any other country," Chancellor Scholz said in Jena. "Nowhere in the world can you find better immigration conditions for people who are needed as workers or researchers," he added.

Earlier this month, in an effort to help German industry compete with Silicon Valley, his government also approved a series of tax reforms that are expected to take effect at the beginning of next year. They will make it easier for startups to offer stock options to employees as part of their compensation.

"These are all the right signals," Büttner said.

Edited by Rina Goldenberg

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Janosch Delcker
Janosch Delcker Janosch Delcker is based in Berlin and covers the intersection of politics and technology.@JanoschDelcker