Digital non-sovereignty: Economy remains dependent on IT from abroad

German companies’ dependence on non-European IT suppliers remains high, a study by the Leibniz Center for European Economic Research (ZEW) in Mannheim shows. According to this, almost 80 percent of the information and manufacturing companies surveyed said that they feel dependent on non-European providers and partners for key digital technologies. This is particularly evident in the field of software and applications, in which providers from the United States are dominant.

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Interviews were conducted with the respondents as per the information provided. 1,200 companies in the information industry (ICT industry, media service providers, knowledge-intensive service providers) and manufacturing industries (chemicals and pharmaceuticals, vehicle manufacturing, mechanical engineering and others). There were also differences in how companies assessed digital sovereignty: three quarters of information industry companies (78 percent) and two thirds of manufacturing companies (68 percent) rated the importance of digital sovereignty to success as high or very high. of the economy of German companies. It is important to the success of their own company for only 55 percent (information economy) and 41 percent (manufacturing industry). When it comes to various aspects of digital sovereignty, the most important thing for all companies is sovereignty over their own data.

Best and no other option?

The largest areas of foreign dependence are in software and applications, with more than a third (36 percent) in the information industry and 28 percent in the manufacturing sector. In the case of generative AI, 30 percent in the information industry and 20 percent in processing saw themselves as dependents, while 27 percent and 23 percent in hardware and infrastructure saw themselves as dependents. In the information economy, security technologies (25 percent) and cloud infrastructure (23 percent) are also heavily dependent on foreign countries, and much less so in the manufacturing sector.

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Most companies cited the lack of European alternatives as the reason they could not move away from technology from foreign suppliers. This was cited by 82 percent in the information industry and 70 percent in the manufacturing sector. For approximately three-quarters of both branches, the technical superiority of the non-European provider is also decisive.

Compared to a similar survey in 2021, lock-in effects have also become more significant, i.e. higher technical barriers to switching providers. At 58 percent, twice as many companies in the information industry as three years ago said they have reached an agreement with a provider. In the manufacturing sector, 51 percent said this, an increase of 19 percentage points.

(axk)