Internet Economy – study calls for stronger funding of the IT industry in Germany

Even a banal comparison of numbers shows how huge the growth potential of the IT industry is – and at the same time how big the differences between different economic regions can be. For example, while the tech sector in the US grew by a whopping 246 percent from 2009 to 2019, the industry’s profits in the EU have only doubled. It looks even more blatant when it comes to the granting of tech patents. While the number in the EU grew by only 63 percent from 2010 to 2020, China recorded an increase of 716 percent.

These meaningful figures with a view to the potential of the IT industry are in the new “Internet Economy Report 2022”, which will be presented this afternoon in Berlin. The analysis, which is presented annually by the Internet Economy Foundation and the companies Roland Berger and Warburg Pincus, states with disappointment that although Europe is the world’s largest trading zone, none of the global top 10 companies in the IT industry are located in this economic area .

But how can it be that a market with such great growth opportunities, of all places in Europe and also in Germany, is still only making sluggish progress? According to the authors’ findings, one important reason has to do with start-up companies, which are considered to be think tanks for digitalization. Above all, what is missing are better financing options, especially with regard to the availability of venture capital. Both the USA and China are miles ahead of the Europeans.

A look at the increase in data consumption by smartphones shows how great the potential of the industry is. According to the report, the volume of data in Europe per smartphone user has grown by 5.2 gigabytes in the past two years alone. Since 2012, the increase has been 42 percent.

As the amount of data that needs to be processed and stored increases significantly with the progressive expansion of 5G technology and the “Artificial Intelligence” (AI) directly linked to it, another sector is becoming increasingly important: outsourced storage in so-called “clouds”. “. Here too, however, the USA dominates the offers.

How immensely important a powerful cloud infrastructure on European soil is not only for the growth of the IT industry, but also for security is shown by the fact that different data laws sometimes severely inhibit the use of foreign cloud services. Because European companies that store their data on servers owned by US companies run the risk, even if those servers are located in Europe, that the US government can seize data in a lawsuit, which may violate European data protection guidelines.

With a view to the development of artificial intelligence, Europe does not paint a satisfactory picture either. The number of published research articles in this extremely important area grew by 59 percent from 2017 to 2020. But in China it’s not just 119 percent. The number of publications is also almost twice as high as in Europe.

After all, Germany is the only country that occupies two places in the ranking of the 20 largest tech hubs on the continent – namely Berlin in 9th place and Munich in 12th place. The authors of the study see a great development opportunity in this tendency of many small tech clusters . These tech hubs have the potential to compensate for the lack of large IT companies such as Google or Facebook.