The coalition agreement shows how the future government wants to shape Germany’s digital future. What do the plans mean for companies in concrete terms? Here are the most important implications:
Digital sovereignty: less dependency, more European integration
The coalition partners are focusing strongly on digital sovereignty – an approach that could have far-reaching consequences for companies.
- Building European integrated and resilient value chains: “We are creating European integrated and resilient value chains for key industries, from raw materials and chips to hardware and software.” This is intended to reduce dependence on non-European manufacturers – both from China and the USA.
- Strengthening open interfaces and standards: “We ensure our digital sovereignty: we define open interfaces and open standards across all levels and systematically promote open source […].” This is a reaction to the increasing dependence on proprietary systems, which are causing huge difficulties in the context of digital transformation and have had an enormous braking effect. With regard to open source, two options are discussed in the document – either “define ambitious targets” or specifically “achieve an open source share of 50% by 2029” for the IT budget.
- Exclusion of untrustworthy providers: “We will exclude untrustworthy providers with legal certainty in future.” This refers primarily to critical infrastructures and is likely a reference to the debate surrounding providers in the 5G network.
Background and context: These measures reflect a fundamental rethink in German digital policy. The realization that “digital policy is power politics” is stated right at the beginning of the paper and shows that digital sovereignty is no longer just seen as an economic necessity, but also as a geopolitical one.
The war in Ukraine and the ongoing tensions with China have drastically highlighted the risks of technological dependencies for Germany and Europe. At the same time, the chip bottleneck during the COVID pandemic has revealed the fragility of global supply chains. With these measures, the coalition partners are clearly trying to free Germany from the “sandwich position” between the USA and China and develop an independent digital identity without losing sight of their EU partners.
The focus on open standards and open source is no coincidence. On the one hand, it enables state control over critical infrastructures without creating new proprietary dependencies and, on the other, it creates innovation potential for the domestic economy. The possible 50 percent share for open source would represent a radical departure from the status quo and could likely have transformative effects on the entire IT sector in Germany.
Significance for companies:
- Companies that are active in key technologies such as chip production or secure software development could expect increased state funding.
- Providers of proprietary solutions should be prepared for stronger competition from open source alternatives.
- IT service providers may have to expand their range of services to include open source components.
- Suppliers for critical infrastructures would have to expect stricter security checks.
Data economy: new opportunities and regulations
A central element of the planned future digital policy concerns the handling of data – far-reaching changes are planned here:
- Promoting a data culture: “We want a culture of data use and data sharing that establishes a data economy, focuses on innovation and protects fundamental rights and freedoms.” This should unlock the economic potential of data without neglecting data protection and other fundamental rights.
- Implementation of the principle of “public money, public data”: “We pursue the principle of ‘public money, public data’ and ensure trust in data management and high data quality through data trustees.” The aim is to make publicly financed data available to the general public.
- Possible data code: The coalition text envisages “creating the basis for combining existing regulations in a data code in future” – a step towards standardizing the previously fragmented data law.
- Legal entitlement to open data: “Where possible, we will create a legal entitlement to open data at state institutions” – a significant expansion of previous open data initiatives.
- Modern rules for special cases: “We are creating a modern regulation for mobility, health and research data. In doing so, we are safeguarding all legitimate interests.” This addresses particularly sensitive and economically relevant data areas. In addition, a research data law is to be presented in 2025 to address sensitive data areas.
Background and context: Germany has missed opportunities in the data economy in the past. While the US achieved enormous growth in data-driven industries with a business-friendly approach and China with a state-driven approach to data usage, Germany struggled with the balance between data protection and data usage.
Politicians are now recognizing this: Europe cannot afford to just set rules for the data economy without actively participating in it itself. The new approach attempts to combine Germany’s traditional strength in the area of data protection with economic innovation potential. Data trustees play a key role here as trustworthy intermediaries between data protection and data use.
The clear focus on public data is also noteworthy: With the “public money, public data” principle and the legal entitlement to open data at state institutions, the coalition wants to position the state as a data enabler. This is in line with the EU data strategy and initiatives such as the Data Governance Act and the Data Act.
The proposed Data Code would be a milestone: it would standardize the currently fragmented legal situation (GDPR, TTDSG, specific industry regulations) and create legal certainty. The separate regulations for mobility, health and research data show that the coalition partners have recognized the particular economic and social importance of this data and are striving for tailored solutions.
Significance for companies:
- Better access to public data would give new impetus to data-driven business models.
- Companies with B2G contracts would have to expect that their data could fall under “public money, public data”.
- Data trustees could gain importance as new players in the ecosystem.
- Simplifying data protection for SMEs and voluntary work could reduce bureaucratic hurdles.
- Privacy enhancing technologies would gain in importance and would offer innovation and business potential.
Digital infrastructure: fiber optics and data centers as a priority
The parties to the coalition agreement attach great importance to the expansion of digital infrastructures.
- Fiber optic expansion to every home: “We are making decisive progress with our digital infrastructure with the nationwide fiber optic expansion FTTH to every (rental) home.” The principle of “market before state” applies here – state funding only where necessary.
- Acceleration law for expansion: “We will introduce an effective acceleration law as quickly as possible that defines mobile and fiber optic expansion as an overriding public interest.” “Fictitious regulations” are intended to reduce bureaucracy and obstacles to expansion.
- Strengthening the data centre location: “We are strengthening Germany as a beacon for data centers in Europe by supporting clusters and regional and decentralized settlements.” This should strengthen the digital infrastructure and promote local value creation.
- Establishment of “AI Gigafactories”: “We are bringing at least one of the European ‘AI Gigafactories’ to Germany” – a clear commitment to the promotion of large-scale AI projects.
- Promotion of edge computing: The document announces that edge computing will be “driven forward” and that the integration of data centers will be facilitated through a “digitalization offensive with electricity grid operators and more transparency regarding grid connection capacities”.
Background and context: Germany’s digital infrastructure has been its Achilles’ heel for years. In an international comparison, Germany lags behind leading nations such as South Korea and Japan when it comes to fiber optic coverage and 5G. This gap not only has an impact on private users, but also increasingly represents a location risk for the economy, especially for data-intensive industries and innovations such as autonomous driving or smart manufacturing.
The coalition paper addresses the familiar problems: lengthy approval procedures, unclear responsibilities and a lack of investment incentives. The “market before state” approach shows that the focus is primarily on private sector investment, but wants to supplement this with state funding where the market fails – typically in rural regions or structurally weak areas.
The planned acceleration law, which defines expansion as an “overriding public interest”, could be a game changer. It would give mobile communications and fiber optic projects similar priority to the expansion of renewable energies and could therefore drastically speed up approval procedures.
The strong emphasis on data centers and AI infrastructure is also noteworthy. The coalition partners have apparently recognized that the cloud and AI revolution not only entails new software applications, but also a massive need for physical infrastructure. The idea of “AI gigafactories” reflects the growing competition for AI computing capacity.
The explicit mention of edge computing also shows that the coalition is not only focusing on centralized data centers, but has also recognized decentralized data processing close to the customer as an important trend – particularly relevant for real-time applications in Industry 4.0, autonomous driving and smart cities.
Significance for companies:
- Telecommunications companies would benefit from the accelerated expansion of fiber optics, but would have to reckon with high supply requirements.
- Data centers can expect easier planning and integration into the power grid.
- Energy companies can look forward to new opportunities in the use of waste heat from data centers.
- Regions with “challenging topography” could become more attractive for companies to settle in by providing special support.
- Mandatory digital application channels (such as the broadband portal) would enable companies to plan more quickly.
AI and innovative technologies: The framework for the innovation location
The future coalition wants to position Germany as a “leading location for digital technologies of the future”.
- Promotion of AI leap innovations: “We are focusing on AI leap innovations (e.g. industry-specific AI language models).” This shows Germany’s ambition to keep up with large AI models, albeit with a focus on specific industries.
- Adaptation of the AI Act: It is being discussed whether “the AI Act should be revised, or at least developed further in the course of the technical and legal specifications”, whereby “burdens on business” should be reduced.
- Central service point for the AI Act: “We are providing companies with a central service point” – an important step towards simplifying the implementation of complex regulations.
- Strengthening real-world laboratories: “We support SMEs and start-ups in particular with targeted services such as AI real-world laboratories” – an attempt to promote innovation outside of large tech companies.
- Expansion of the space industry: “We will strengthen Germany’s space industry, build a resilient satellite infrastructure, for example for crisis communication and internet connectivity, and create sovereign capacities for launching satellites into space from Europe.” This underlines the strategic importance of space for digital sovereignty.
Background and context: The AI revolution has put Germany in an ambivalent position: on the one hand, the country has excellent research facilities and a strong industrial base that could benefit from AI applications. On the other hand, Germany is at risk of falling behind the USA and China, which are investing massively in this technology, when it comes to ground-breaking AI innovations.
The phrase “industry-specific AI language models” is revealing. Instead of competing directly with generalist models, Germany is focusing on a niche strategy that combines its industrial strengths in areas such as automotive, mechanical engineering and chemicals with specialist AI expertise. This could be a smart way to develop world-leading AI applications in certain industries without entering a hopeless race for general AI models.
The critical attitude towards the EU AI Act is remarkable. While Germany traditionally stands for strict regulation, the desire for revision or at least flexible implementation of the AI Act shows an increasing awareness that excessive regulation could hinder the ability to innovate. The central service point is intended to help make the complexity of the new regulations manageable for companies – an important step towards practically lowering regulatory hurdles without sacrificing protection standards.
The strong emphasis on real-world laboratories for SMEs and start-ups shows the effort to not just leave AI innovations to the tech giants, but to anchor them more broadly in the economy. This is in line with Germany’s traditional strength in SMEs.
The inclusion of the space industry in digital policy underlines the growing importance of satellite communication for digital infrastructures – especially in times of crisis or for supplying remote areas. The explicit desire for “sovereign capacities” for satellite launch capability shows that the coalition partners do not want to be dependent on other powers in space either.
Significance for companies:
- Companies working on industry-specific AI solutions can expect increased funding.
- The planned low-bureaucracy implementation of the AI Act could reduce regulatory hurdles for AI developers.
- SMEs and start-ups are better introduced to key technologies through targeted offers such as AI real laboratories.
- The involvement of civil society and trade unions in AI development points to higher requirements for socially responsible design.
- Companies in the space and satellite technology sector can benefit from new funding opportunities.
Digital administration: progress in e-government
The digital transformation of the administration is to be driven forward decisively:
- Deutschland-ID and EUDI wallet: “We are implementing the modernization of the register, creating access to the administration via the automatically provided Deutschland-ID and the secure eID/EUDI wallet.” This is intended to revolutionize digital identification, with “an ecosystem developing around the EUDI wallet”.
- Register modernization and end-to-end digitalization: The coalition paper calls for “end-to-end digitalization and digital-capable laws” as the key to a “forward-looking, networked, efficient and user-centric administration”.
- Once-only principle: “We are anchoring a ban on duplicate data collection (once only)” – a long overdue step towards reducing bureaucracy that could save citizens and companies a lot of time.
- Reduction of the written form requirement: Two options are being discussed: either selective removal of obstacles to digitization “for example in the written form requirement” or more radically through “a general clause to abolish the written form requirement”.
- State as a market driver: “We are making the state an anchor customer for the digital economy” – a clear signal to the tech industry that public contracts should increasingly flow into innovative digital solutions.
Significance for companies:
- The bureaucratic burden would be reduced through the once-only principle and digitally compatible laws.
- Administrative processes would be simplified by digital identities such as the Deutschland-ID.
- The emerging ecosystem around the EUDI wallet would open up new business opportunities.
- IT companies could benefit from the state as an “anchor customer”.
- The sovereign German stack would offer opportunities for European tech providers.
Cybersecurity and digital resilience
Information security and digital resilience are becoming even more of a focus of German policy than before:
- IT security is to be strengthened, particularly in critical infrastructures (KRITIS).
- Robust digital value chains, for example in chip and semiconductor technology, are to be established.
- Capabilities and products for protection in cyberspace are to be classified as strategically important key technologies.
- The Federal Office for Information Security (BSI) is to be expanded into a central office and its cyber defense capabilities strengthened.
- SMEs should receive preventative advice and support in implementing EU regulations such as the Cyber Resilience Act.
Background and context: The geopolitical situation, increasing cyberattacks on companies and state institutions as well as hybrid threats require a significant strengthening of digital defenses and resilience. The protection of critical infrastructures is essential for the functioning of the state and the economy. The coalition agreement responds to this with a bundle of measures, from strengthening state institutions such as the BSI and establishing secure technology chains to supporting the economy, especially SMEs, in improving their own security and meeting new EU requirements (NIS-2, Cyber Resilience Act). Digital resilience is seen as a task for the entire state and a prerequisite for digital sovereignty.
Significance for companies:
- Companies, especially KRITIS operators and their suppliers, should expect increased cyber security requirements.
- Companies can make use of government support services to improve their IT security and implement regulations.
- Companies in the cyber security sector can benefit from a growing market for their solutions and services.
- Anchoring digital resilience as a strategic corporate goal is becoming increasingly important.
Conclusion: seize opportunities, prepare for change
The coalition’s digitalization plans, if they are actually implemented, could significantly change Germany’s digital landscape. For companies, this means
- Investment opportunities in areas such as open source, AI development and digital infrastructure
- New business models through better data access and digital identities
- Regulatory relief for data protection and AI development
- Stronger orientation towards European standards and value chains
- Less bureaucracy thanks to end-to-end digitalized administrative processes
However, some aspects remain unclear, such as the financing of the measures and the resolution of contradictions between different working groups. Companies should keep a close eye on further developments and prepare for the upcoming changes at an early stage.
