The government is excited by Google’s announcement of a $1 billion investment in the country’s data economy. But experts warn of technology dependence, risks to digital sovereignty and climate impacts. Google announced on Tuesday (November 11) that it will invest 5.5 billion euros (28.9 billion reais) in Germany over the next four years. The funds will be used to build a new data processing center near Frankfurt and expand three existing data processing centers in the same city, Munich and Berlin.
German officials welcomed the news as a boost to the country’s digital ambitions. Data processing centers (data centers in English) are used by major technology companies, Big Tech, to maintain their artificial intelligence (AI) tools.
“We want to make Germany the leader in data processing centers in Europe,” Digitalization Minister Carsten Wildberger told Reuters. Research and Technology Minister Dorothee Baer said the decision would bring “growth and added value” to the country.
Finance Minister Lars Klingbeil was also excited by the announcement, calling the plan a “real investment in the future” and part of the carbon-neutral transformation. Google expects to create 9,000 jobs a year in Germany by 2029.
Experts urge caution
But experts also talk about the negative points. Katharina Herzl, director of the Fraunhofer Institute in Stuttgart, warns of reliance on new forms of external capital.
“We are building an infrastructure that will make secession even more difficult in the future,” he claimed in an interview with DW. Concerns about Germany’s digital sovereignty are growing in niche areas, for reasons such as large-scale data storage.
For Wolfgang Eppler, a researcher at the Institute for Technology Assessment Systems Analysis (ITAS, German acronym) in Karlsruhe, the amount announced is low compared to spending in the United States. “Compared to the amount that the United States is investing, for example $500 billion (2.6 trillion reais), that’s a drop in the bucket.”
The gap between Europe and the United States (US) is widening, with technology companies such as Microsoft and Google and startups such as OpenAI investing hundreds of billions of dollars to expand AI computing power.
According to Bloomberg, the German project will require the use of up to 10,000 graphics processing units (GPUs). One data center in Texas has 500,000 GPUs planned, backed by SoftBank, OpenAI, and Oracle.
Bet on the data economy
Google isn’t the only company betting on Germany’s data economy. Just last week, German telecommunications operator Deutsche Telekom and American AI chip maker Nvidia announced a €1 billion (R$5.3 billion) joint data processing center project.
Total investment in data processing centers in Germany is expected to reach 12 billion euros (63.2 billion reais) this year, according to industry association Bitkom.
In September, French company Data4 announced plans to invest around 2 billion euros (10.6 billion reais), laying the foundations for its first German division in Hanau. Meanwhile, the Artificial Intelligence Innovation Park (IPAI) in Heilbronn, a city north of Stuttgart, is set to become Europe’s largest AI ecosystem focused on chip design.
The European Union (EU) is also trying to narrow the technology gap. In February, the bloc announced a 200 billion euro (1 trillion reais) plan to accelerate the development of AI and triple the capacity of these systems in the region by 2032.
Deutsche Telekom is reportedly in talks with several companies to build a so-called AI gigafactory, but progress has been slow and the EU has yet to provide details on how it will evaluate the project or allocate resources.
A recent study by Bitkom points out that total server capacity in Germany is expected to nearly double, reaching 5 gigawatts by 2030.
unlikely neutrality
Fraunhofer’s Herzl is cautiously optimistic, saying that completely carbon-neutral data processing centers, as preached by finance ministers, remain a challenge.
“We don’t know if we’ll ever reach zero emissions,” she says. “But if we don’t build our own data centers, we need to at least think about how we can develop the technology that will be used there. I believe there is an opportunity for us in this area.”
Google says its new facility in Germany will be built with a focus on sustainability.
The company plans to capture and reuse waste heat from its data processing center near Frankfurt and feed it into the district heating network of regional power company EVO. Once operational, the system will be able to provide hot water and heating to more than 2,000 nearby homes.
A risk to Europe’s digital sovereignty?
Both Herzle and Eppler advise German politicians to remain vigilant.
“We can’t be too dependent on[big American technology companies],” Eppler warned, stressing that in the case of Google, American companies store and process data generated in Germany.
Herzl says he is comforted by the “increased discussion of digital sovereignty over the past 12 months.” Still, she stresses that “it is very important that German policy pays close attention to where this data is stored and who has access to it.” “This is a fundamental issue to protect the competitiveness of German industry,” he said.
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