Microsoft invests €3.2 billion in AI and the cloud in Germany

Microsoft will invest €3.2 billion in Germany by the end of 2025 to double the artificial intelligence and cloud capacities of its data centers there. The company also wants to train more than 1.2 million people in digital skills.

Brad Smith, Vice Chair and President of Microsoft, said the aim is to enable the German economy to benefit from AI in order to continue to expand its leading global position in terms of competitiveness.

Germany has always been at the forefront of technological and innovative change, Smith said, and this is also evident in terms of AI when he analyses the data available to Microsoft.

Germany second for enterprise AI use

For example, he said, Germany ranks second worldwide in the nationwide use of AI by companies, which reflects the rapidly growing acceptance of AI technology. Smith also sees Germany in second place in Europe for the development of AI-based applications, an assessment he bases on code contributions on GitHub, Microsoft’s source code repository.

In contrast, Germany’s ranking is less favorable when it comes to education. While Germany is number two in the use and development of AI, it only ranks 11th in Europe when it comes to AI skills, according to the Microsoft President.

According to Marianne Janik, head of Microsoft Germany, the company wants to use the investments to trigger a second digitization push in Germany, in which the country enriches its domain knowledge with AI.

While 2023 was still a year of trial and error in terms of generative AI, when everyone put together and tried out all kinds of ingredients, 2024 is the year in which German industrial giants such as Siemens, Mercedes-Benz, Bayer, and BASF — will deeply integrate AI technologies into their own services. Ultimately, the German economy could create a unique selling point with the help of AI. 

According to Janik, the International Monetary Fund’s AI Readiness Index also shows that the economy has nothing to hide when it comes to AI. It puts Germany in third place worldwide behind Singapore and the US. In addition, she said, the widespread use of AI offers Germany the opportunity to increase its gross national product by 0.6% per year.

“However, this is not a sure-fire success,” she warned. “We need a strong digital infrastructure and the right skills. We really need to empower everyone in Germany to be able to use these AI technologies.”

New data centres

After doubling the capacity of its own data centers in Germany in 2023, Microsoft intends to double it again by the end of 2025. One focus will be on expanding the cloud region around Frankfurt am Main. In addition, new infrastructure is planned in the Rhenish mining district in North Rhine-Westphalia.

When building the new data centers, Microsoft is also paying attention to the sustainability aspect and investing in renewable energies.

“We will generate more electricity from renewable energy sources than our data centers consume,” Smith promised, noting that Microsoft is focusing on solar energy in Germany.

Microsoft’s education offensive

When it comes to digital training, Microsoft is relying on its partner network. Together with the partner ecosystem, the US company wants to launch new training programs that focus on building AI skills, developing technical AI capabilities, supporting AI transformation in companies, and promoting the safe and responsible development of AI. Work is also underway on a first professional certificate for generative AI, the company said.

In order to achieve its goal of training more than 1.2 million people in Germany by 2025, Microsoft intends to cooperate with the Confederation of German Employers’ Associations (BDA), the German Federal Employment Agency and companies such as Schaeffler and the DHL Group, among others. Microsoft also supports the ReDI School of Digital Integration, which helps refugees and marginalized groups to find jobs in the German IT industry.

In light of the fact that Germany is currently struggling with the relocation of production sites abroad, German Federal Chancellor Olaf Scholz praised Microsoft’s investment plans “as a good morning for Germany, because it is not every day that investments of more than three billion euros are announced.” Especially as Microsoft is not receiving any subsidies for the investment. Scholz also sees the investment as a commitment to progress, growth, modernity and global openness.

Even though Brad Smith emphasized Microsoft’s trust in the German government and the leadership of Chancellor Scholz in his speech, the Microsoft President could not resist making one small dig: “We see that public budgets have reached their limits. This is the time for the private sector to step in,” he said. “This is the time for companies like ours to move forward to ensure future competitiveness by investing in infrastructure and people’s skills.”