Europe's digital decline: How Germany risks losing the AI and software race
Germany and Europe are falling behind in global standardization, particularly in software and artificial intelligence. While both regions have traditionally led in manufacturing and sustainability, the USA and China now dominate key digital sectors. Industry leaders are now calling for stronger action to secure future competitiveness.
The European Commission has adopted a new strategy to use standardization as both an economic and regulatory tool. Meanwhile, German industry groups are urging the federal government to work more closely with businesses on a national approach. Germany has long been a leader in international standardization for manufacturing and sustainability. Its focus on export-driven industries with strong trade surpluses has shaped its approach. However, in software and AI, the country lags behind the USA's innovation and China's control over critical supply chains.
The USA leads in software development, while China dominates AI technology and raw materials essential for tech production. Germany, in contrast, has prioritised EU-aligned standards like the European Sustainability Reporting Standards (ESRS) and support for skilled labour. Yet it lacks a clear strategy for AI and software standardization.
Achim Berg, President of Bitkom, highlighted the issue in response to the European Commission's new standardization strategy. He stressed that standards define global market rules—and those who set them hold the advantage. To strengthen its position, Germany must increase its involvement in digital standardization efforts.
Bitkom's proposals include financial support for companies engaged in standardization work. They suggest reimbursing expenses when employees contribute to these efforts. Additionally, they recommend classifying standardization-related costs as eligible for research and development funding.
The EU's strategy aims to use standardization not just as a technical process but as a key economic and regulatory instrument. This shift could help Europe regain influence in critical digital sectors. However, success will depend on closer collaboration between governments and industry leaders. Germany's digital economy must take a more active role in shaping global standards to remain competitive. The federal government is being urged to partner with businesses on a national standardization strategy. Without stronger involvement, Europe risks losing further ground to the USA and China in software and AI development.
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