As it did five years ago, the eco Association forecasts continued strong growth for Germany’s internet economy through 2030. According to its new study, the AI revolution will be a key growth driver – while energy shortages could act as a brake.

Every five years, the eco Association, together with management consultancy Arthur D. Little, publishes a special outlook on the expected development of Germany’s internet economy over the coming years. Between 2020 and 2025, the two organisations projected – despite the pandemic – that sector revenues would rise by nearly 75 percent to around €253 billion, reports IT-Business. That forecast centred on rapidly expanding e-commerce and the build-out of digital infrastructure.

For 2025-2030, eco projects an average annual growth rate of nearly 10 percent for Germany’s internet economy, lifting total revenue to €389 billion. Digital transaction and platform business models are expected to generate almost 40 percent of that revenue. Tech services will also make a substantial contribution to growth – and increasingly so will artificial intelligence (AI). Key development priorities through 2030 include expanding data centres and telecommunications networks.

Demand Growing for Greater Computing Power and Energy Efficiency

The “reality check” of projections from the 2020 study reveals that the German internet economy’s market volume in 2024 stood at approximately €221 billion – just under five percent short of the then-forecast €232 billion.

The deviation is more pronounced relative to the 2023 eco/ADL study, which projected a 2024 market volume of €251 billion – roughly 13.3 percent above the actual figure. That 2023 study had still assumed a significant digitalisation boost driven by generative AI. While the AI effect was indeed tangible, the new study finds it unfolded more slowly than anticipated. According to the study authors and ITB (German Association for Information Technology, Telecommunications and New Media), emerging technologies such as generative AI, edge computing, and 5G are raising requirements for computing power, energy efficiency, data availability, and network latency.

Training modern AI models would also demand enormous resources – and intensify efforts to meet political targets for nationwide fibre-optic and 5G coverage by 2030. On this point, ADL partner Dr Nejc Jakobin expresses doubts, stating he is “quite sceptical that this will work as planned.” In his assessment, achieving full coverage will take significantly longer.

A Deluge of Innovations and the Quest for Sovereignty

AI – and particularly generative AI – has triggered a deluge of innovations, while enterprises simultaneously face intense pressure from financial considerations. “We’re also seeing a heightened drive toward sovereignty among companies, which are seeking greater choice in their cloud environments,” said Jakopin.

Lars Riegel, Partner at Arthur D. Little, notes that competition in digital infrastructure is increasingly perceived as “brutal.” He is also concerned that many companies now regard AI investments as essential – after all, customers will soon demand sustainable resource provisioning.

Jakopin adds that “many data centre operators find themselves torn between growth opportunities and constraints imposed by energy scarcity,” calling this one of their greatest challenges.

Germany Lags Behind in Fibre-Optic Rollout

The eco Association sees major challenges ahead for fibre-optic network operators. While these companies are widely regarded as a growth engine for the ICT sector – and indeed for the entire German economy – their CEOs face highly complex demands. Meeting those demands requires targeted measures to expand the country’s data centre and telecommunications infrastructure on time and sustainably.

These measures include reducing energy costs, accelerating permitting procedures, introducing targeted investment incentives, facilitating the reuse of waste heat, location marketing and cluster management, and fostering closer dialogue between industry and policymakers.

By contrast, with 5G, the Federal Republic of Germany is on par with other industrialised nations – including the UK and the USA – achieving near-nationwide coverage at 98 per cent.

For fibre-to-the-home/building (FTTH/B) connections, Germany trails the EU average: just 42 per cent of premises are connected, versus an EU-wide rate of 69 per cent. In Italy, the figure stands at 64 per cent; in the United Kingdom, 71 per cent; and in France, as high as 90 per cent. Pressure is therefore mounting in Germany – and there remains substantial work to be done across the fibre-optic landscape. Broadband connectivity in Germany still clearly requires improvement and further investment. Whether the federal government’s Gigabit pledge can be fulfilled will also depend on stepped-up private-sector investment.

Lichtblick AI

When it comes to adopting artificial intelligence, German small and medium-sized enterprises (SMEs) fare relatively well – 28 percent are using AI, compared with an EU average of 21 percent. In Norway, however, the figure stands significantly higher at 41 percent; among large enterprises, the gap widens further, at 63 percent versus 48 percent.

Overall, the internet economy is expected to remain a dynamic growth engine for Germany’s national economy through 2030. According to the eco Association, cloud and platform services, AI-driven applications, and data-intensive industries are the primary drivers of this development. The study confirms that the digital ecosystem continues to evolve faster than all other sectors – “thereby solidifying its role as a key industry for innovation, competitiveness, and resilient value creation in Germany,” states the report’s conclusion and outlook.

For Oliver Süme, CEO of the eco Association, this is “a positive signal that Germany’s internet economy is growing faster than the overall economy.” Digital channels thus hold high strategic importance as “the heart and circulatory system of the German economy.”

Image source: Adobe Stock / Bassmallah

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