Follow us on Google News
German Chancellor Friedrich Merz has called on Germany and Europe to accelerate the development of their own artificial intelligence capabilities, warning that excessive dependence on foreign technology providers could undermine their digital sovereignty.
Speaking at the German government’s Digital Summit in Berlin on November 2, Merz said countries risk losing control as AI becomes embedded across their economies. He argued that Germany must be able to develop, produce and manage technology independently, securely and autonomously, from hardware to software.
Merz described digital sovereignty in the AI era as an existential question. He said the country needed a major technological and organisational effort, alongside extensive modernisation of government and the wider economy.
His remarks come as Germany faces questions about whether its domestic technology sector, digital infrastructure and workforce are sufficiently prepared to compete in the rapidly expanding AI industry.
Germany’s AI Ambition Meets A Technology Gap
The scale of the challenge was highlighted by the Munich-based Ifo Institute, which published an assessment of Germany’s readiness for the AI boom on the same day.
The institute found that information and communication technology accounts for just 4.6% of Germany’s gross value added, placing the country in the lower-middle range among European Union members. In 2025, Germany imported $11 billion more in ICT services than it exported.
Ifo researcher Christian Pfaffl said Germany was more reliant on foreign countries in information and communication technology than any other EU member. The findings underline the gap between the government’s ambition to build independent capabilities and the country’s existing dependence on overseas suppliers.
The institute also pointed to slow digitalisation in public administration. Many government bodies still rely heavily on paper correspondence and record-keeping, while services such as pre-filled forms remain at an experimental stage in Germany despite wider adoption in countries including the Netherlands, Denmark, Poland and Austria.
Skills are another concern. Ifo said 40% of German eighth-grade students failed to reach level two in computer and information literacy. It also identified a lack of expertise as the most common reason companies struggle to implement planned AI projects.
These weaknesses matter because AI development requires more than access to software. It depends on computing infrastructure, advanced chips, cloud services, skilled workers, research institutions and businesses capable of turning new technology into products.
Merz Wants Control Across The AI Value Chain
Merz said Germany must strengthen its ability to manage technology throughout the entire value chain rather than depend entirely on external providers.
That ambition covers the underlying hardware and computing systems as well as AI models, software and the infrastructure used to deploy them. A country that relies heavily on overseas companies for these components may have limited control over how critical systems are developed, maintained and accessed.
The German government established a national AI strategy in 2018. Merz also appointed a minister responsible for digitalisation and modernisation after taking office last year, with the government promising to accelerate the country’s digital transformation.
However, the Ifo findings suggest that policy commitments have not yet translated into sufficient progress in public services, technology development and digital skills.
Merz highlighted Germany’s strengths in industrial engineering and said the country would work with partners that share its objectives, including Canada and France. This suggests that digital sovereignty does not necessarily mean building every technology within national borders, but developing enough domestic and allied capability to avoid excessive dependence on individual suppliers.
The government’s two-day Digital Summit, held under the theme “Shaping AI: Safe, Sovereign, Competitive”, is focused on the strategic direction of artificial intelligence, its applications and safety, and the development of a stronger AI ecosystem.
Why Digital Sovereignty Is Becoming An Economic Issue
The debate is no longer limited to where government data is stored or which company supplies a particular software product. As AI becomes part of manufacturing, financial services, healthcare and public administration, access to the technology could influence productivity and the competitiveness of entire industries.
For Germany, the challenge is particularly significant because of its large industrial economy. Companies seeking to use AI in engineering, manufacturing and research need reliable computing resources, specialised expertise and the ability to integrate advanced systems into existing operations.
Dependence on external providers can also create vulnerabilities if access to technology is affected by commercial disputes, geopolitical tensions or changes in supply conditions. Building domestic capabilities and working with trusted partners could give businesses and public institutions more options.
But the Ifo assessment shows that Germany must address basic weaknesses before it can fully benefit from the AI expansion. Modernising public administration, improving digital education and strengthening the domestic technology sector will be as important as announcing new AI ambitions.
What this means for you:
For citizens and businesses, stronger domestic AI capabilities could eventually mean better digital public services, more locally developed technology and greater control over sensitive data. Whether Germany can deliver those benefits will depend on investment in infrastructure, education and practical digital reforms.
