Digital Economy News | May 2024

Confidence returns to Germany’s digital economy

Business confidence is returning to Germany’s digital economy, with the mood in the sector quietly optimistic after the first business quarter according to digital association Bitkom. The current Bitkom-ifo Digital Index shows business confidence up to 15.5 points ­– 1.2 points higher than in February. The index is an indicator of the current digital business situation and expectations for the upcoming business quarter. Companies surveyed include actors in the manufacturing, trade and service sectors and include manufacturers of IT and communications technology, consumer electronics, IT and software service providers, and telecom suppliers as well as wholesalers and retailers. The upturn is the first month-on-month increase since July 2023, with business expectations for the rest of the year also significantly improving from February, with the generally negative trend falling to -2.2 points from -10.2 points. This is reflective of a broader trend within the digital sector which is generally more confident than the economy as a whole. 

EU Parliament passes AI Act

The European Union (EU) Parliament has passed an Artificial Intelligence (AI) Act to regulate the use of AI systems – particularly high-risk applications – across its member states. The new legislation establishes clear guidelines for permitted areas of application as well as strict prohibitions for other areas of application. The AI Act prohibits the use of AI for biometric categorization; untargeted facial image capture; emotion recognition in work and education environments; social scoring; predictive policing; and any manipulation or exploitation of human weaknesses by AI. Specific requirements have also been put in place for providers of general-purpose AI systems (including GPT-4 from OpenAI and Google’s Gemini language models). The new “human-centric” act sets out strict requirements for the use of AI and emphasizes the transparency obligation of companies that develop basic AI models. The foundation of the agreement is a risk-based tiered system where the highest level of regulation applies to those machines that pose the highest risk to health, safety and human rights. The legal framework is intended to become a blueprint for other countries and position Europe as a global AI standard setter. The new law is expected to come into force before the end of the current legislative period, with measures being cascaded in a number of transitional implementation periods. General regulations and obligations for high-risk application will apply in full by 2027. 

Digital Services Act to combat illegal content

A new Digital Service Act came into effect in May in Germany after being passed by the Bundestag. The new legislation seeks to combat illegal content on online platforms more effectively, with the country’s Federal Network Agency set to take central role in monitoring and administering the law. Large online platforms and search engines are now subject to regulatory measures designed to protect consumers more effectively against online manipulation as well as make terms of use more transparent and comprehensible. Disinformation and hate speech are also governed by the new act that seeks to promote and protect democratic values across EU member state borders. 

National cybersecurity center opens in Bonn

Germany’s Federal Office for Information Security has opened a national cybersecurity center in Bonn. The National IT Situation Centre will help combat and prevent cybercrime which cost the domestic economy EUR 206 billion last year alone. Almost two thirds (63 percent) of companies in Germany expect to fall victim to cyberattacks in the current year, with one in two companies of the mind that a successful cyberattack represents an existential threat to their business. The new facility will act as a platform for the active exchange of information about the domestic cybersecurity situation with domestic and international partners and function as a national IT crisis response center in the event of a crisis. Equipped with 10 workstations, the center will evaluate around 2,800 IT security incident and vulnerability reports annually. 

ChatGPT helps spark AI boom in Germany

ChatGPT has sparked an AI boom in Germany according to a recent study conducted by the German Chambers of Commerce Abroad (DIHK). The proportion of companies that now use AI or machine learning has doubled from 13.8 percent to 26.8 percent compared to the previous year, with a further third of respondents planning to implement AI in the future. According to the DIHK, this represents a significant increase of 24 percent of the four thousand companies surveyed for the report. Of those seeking to implement AI in the near future, 40 percent are companies in the financial sector and industry respectively.

Berlin start-up’s AI solution

for biotech and pharma clients 

Berlin-based start-up Reliant AI, founded by a team of former Google researchers, is developing AI software to support pharmaceutical and biotech companies optimize their business decision-making processes. Drug licensing, acquisition and clinical trial investment decisions are simplified using the company’s generative AI solution. The company has already won clients including Kyowa Kirin and Omass Therapeutics despite only launching on the market a few months ago. 

Generative AI start-up numbers growing

Growing demand for generative AI solutions has seen the number of new start-ups in the field in Germany grow dramatically – 341 new AI-related companies were founded in 2023, around 66 percent more than in the previous year. Financing volume for the year topped the EUR 22.3 billion mark, corresponding to a 363 percent increase. 

Jülich and eleQtron

develop quantum supercomputer 

The Jülich Supercomputing Centre (JSC) at Forschungszentrum Jülich and Siegen-based start-up eleQtron are working together to develop a modular quantum supercomputer. The EPIQ project, which will receive EUR 21 million in funding from the state of North Rhine-Westphalia, will see the two partners work to create a trapped-ion quantum computer whose qubits perform calculations using a revolutionary microwave control system developed at the University of Siegen. The eleQtron quantum computer pilot system will be built from the end of the year and integrated into the JUNIQ Jülich user infrastructure for quantum computing. The ambitious project aims to complete a production-ready quantum supercomputer by 2027.