Germany Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in germany, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Digital Economy
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Overview

Germany is one of the United States’ most significant trading partners and its digital economy is of fundamental importance to U.S. tech companies.  Germany’s digital economy has seen significant and stable growth over the past years, not being impacted by the economic slowdown found in other sectors. It has grown to be worth over USD 250 billion in 2024, up from USD 239 billion in 2023.  

In the coalition agreement for its 2025-2029 mandate, the new federal government has stressed the importance of the digital economy including by creating a stand-alone digital ministry (Federal Ministry for Digital Affairs and State Modernization) led by a former private-sector executive. Key goals for the government are to increase investments in numerous aspects of the digital economy, including in artificial intelligence (AI) and quantum computing (QC). More specifically, per the coalition agreement, Germany seeks to improve the digitalization of the public administration (“state modernization”), expand and modernize digital infrastructure such as fiber optic and 5G networks, and promote the digital economy, while also improving data usage and data sharing to boost innovation. A central concept at both national and European level is digital sovereignty, with a focus on becoming less dependent on digital technologies from the United States and China. This presents U.S. companies opportunities and challenges in navigating local content, compliance, and potentially exclusions.  

U.S.-Germany cooperation is particularly advanced in emerging technologies. The 2024 Joint Statement on Cooperation in Quantum Information Science and Technology (QIST), reaffirmed a shared commitment to deepening transatlantic quantum partnerships. Quantum hardware vendors and cloud-based platforms are expanding their presence in Germany’s growing ecosystem.  

According to a 2024 European Union (EU) report (Digital Decade 2024: Country Reports), Germany is below the EU average in digitalization of public services both for citizens (score 75.8 versus the EU average of 79.4) and businesses (78.6 versus 85.4).  However, the report notes the significant investment the federal government is making to improve its digital economy. A 2024 KfW Study found that Germany is lagging behind other large economies in terms of number of academic publications and patents relating to digital technologies with the trend currently showing no signs of changing.  

EU law takes supremacy over national laws and as such most regulations for its digital economy are set at the EU level rather than in Germany.  


Market Challenges

Most laws related to the digital economy are set at the EU level. The Digital Economy Chapter of our Country Commercial Guide for the European Union provides a more comprehensive overview.  

In addition, some legislation is still set at Germany’s national level, including:  

Online Access Act: Enacted in 2017 and amended in 2024, this Act expands the digital services provided by Germany’s public administration. Services for companies should be completely online by 2029.  

NIS2-Umsetzungs- und Cybersicherheitsstärkungsgesetz: Proposed legislation, to translate the EU’s NIS-2 directive into German law. Will require companies with 50+ employees identified as “essential or important entities” to invest in cybersecurity measures and report on incidents.  

In Germany data privacy is taken very seriously and overseen both at the state and federal level. Each state has its own data protection agency, which has jurisdiction over companies and public authorities within the state. At the national level, the Federal Commissioner for Data Protection and Freedom of Information oversees federal public authorities and the telecommunications and postal sector. Overall, EU data privacy is regulated by the EU’s General Data Protection Regulation (GDPR).  

A 2024 report by Deutsche Bundesbank, found that 51 percent of all payments in Germany were still conducted with physical currency. This is a high proportion compared to other major economies. However, card payments are on the rise.  One effort the new Digital Ministry is undertaking is with respect to a Digital Euro or Digital Wallet for German citizens.  

The German government views investment in AI as an essential component to maintain its national security, boost innovation and economic growth, and maintain its place in the global economy. One of its goals is to enable AI to be “Made in Germany” through innovation-friendly regulation. The new coalition government has committed to building at least one European “AI gigafactory” in Germany. The government also plans massive investment in AI and cloud technologies to create a domestic technology stack; however, the specific aspects of that plan are unclear.  AI in Germany is regulated by the EU’s AI Act.  

Digital sovereignty is a key concept propagated by the new German government as well as other EU member states and the European Commission. Whether digital sovereignty will be included in EU-led projects such as Gaia-X and the EU Cybersecurity Certification Scheme for Cloud Services (EUCS) remains open.  

While 96 percent of the country does have fast internet coverage, this is primarily by very high-capacity network (VHCN) and not fiberoptic cables. A notable urban-rural divide still exists when it comes to internet speed.  

The United States Trade Representative’s 2024 National Trade Estimate Report on Foreign Trade Barriers outlines additional barriers to U.S. goods and services in Germany, including in areas related to its digital economy.  

Digital Market Opportunities

Germany’s 2022 gigabit strategy calls for more investments in Germany’s fiberoptic networks. It aims to have 50 percent of the country connected by Fiber to the Premises (FTTP) by 2025 and 100 percent by 2030. As of 2024, FTTP was at 29.8% in Germany. The strategy includes USD 12.6 billion in government subsidies and estimates private sector investments by telecommunication companies at USD 52.6 billion. Communication equipment across the rail network will also be updated as part of the strategy. The new German government continues to prioritize the quick rollout of digital infrastructure.  In June 2025, the governing coalition passed legislation in the Bundestag which attributes a “preeminent public interest” to fiber and mobile broadband expansion until the end of 2030, facilitating quicker approval and planning procedures.  

Microsoft and Apple announced substantial investments in Germany’s digital economy. The former intends to allocate USD 3.4 billion until 2026 primarily to build out its data center infrastructure.  

Cross-Sector Enabling Technologies  

In 2024, Germany forged an agreement with the mobile network operators (MNOs) to remove Huawei and ZTE equipment from its most critical communications infrastructure. German MNOs are required to remove these components from their core 5G networks by 2026.  In addition, Germany is among the world leaders in adopting Open Radio Access Network (Open RAN) technology, which increases competition due the interoperability of equipment. Deutsche Telekom, O2 Germany (Telefonica), and Vodafone have all already started to deploy Open RAN. A fourth operator, 1&1 (United Internet), is currently building out a new network based solely on Open RAN technology.  

In January 2025, the federal government updated its “Research and Innovation for Technical Sovereignty 2030” (FITS2020) strategy. The program allocates USD 1.7 billion annually to strengthen Germany’s position in digital and industrial technologies. Although the program focuses on supporting domestic technology, it acknowledges the need to cooperate with companies outside of Germany.  

Despite concerns about sovereignty, U.S. companies remain active in Germany’s quantum computing sector. In 2024, IBM inaugurated its first European Quantum Data Center in Ehningen, Germany, housing advanced chips and offering industrial-scale quantum processing. (However, the platform and data will remain housed in the United States).  

Specific Industry Sub-sectors  

AI  

Germany’s AI scene is growing quickly. In 2024, the market for developing, training and operating AI platforms increased by 43% to USD 2.5 billion. Bitkom, Germany’s digital industry association, reported that 42% of German industrial companies use AI as part of the production process. A further 35% of industrial companies plan to use AI in the future.    

Cloud Computing  

Germany’s market for cloud computing is expected to grow by 17% and total USD 21.5 billion in 2025. According to a 2025 Bitkom report, 90% of German companies already use cloud computing, with the rest of firms planning to use cloud services. Typically, these services are used for bookkeeping/financial planning, office software, email, and data storage. 77% of German firms are using cloud-based AI services or have indicated desire to do so. 100% of companies signaled they would prefer German providers for cloud services, while only 6% prefer a U.S. based company.  However, 65% of companies are only willing to use German providers if they are on par with U.S. and international competitors. Multi-cloud infrastructure, i.e. relying on multiple cloud service providers to avoid service failures, is used by 41% of German companies. Virtually all companies view IT security, data protection and compliance as the most important must-have from a cloud provider. This is followed closely by performance and stability and the potential for data encryption.  

Cybersecurity  

Cybersecurity remains a key issue for German companies and continues to be a fast-growing market segment. In 2024, revenues for security software rose 11% to USD 5.5 billion. Seven out of ten companies feel strongly threatened by analogue and digital attacks. Over 80% of companies were hit with an attack in 2024 resulting in USD 312 billion in damages – an almost 30 percent increase in damages from the previous year. The most recent update to the nation’s cybersecurity policy came in 2021 and extends through 2026. The plan has three action areas including focusing on citizens and society, government and private industry working together, and a strong and sustainable cyber security architecture for every level of government.   

Digital Economy-related trade events  

Helpful Resources