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Microsoft to invest EUR 3.2bn in Germany Data Centers and Artificial Intelligence

29 February 2024
by eub2 -- last modified 29 February 2024

This week Microsoft President Brad Smith announced the largest investment in Germany in the company’s history. The US tech giant plans to invest over 3.2 billion euros - that's 3.5 billion US dollars - into its German artificial intelligence (AI) business by the end of 2025.


The Microsoft vice-president emphasized that people trust Germany's willingness to innovate and the government under Chancellor Olaf Scholz and their work, which attracts such investments.

The Microsoft manager emphasizes that Germany is currently number two in the world in the use of AI by organizations after the USA and Germany is the second most important developer of AI applications in Europe. And being at the forefront is good, because AI is a market with immense growth potential. And a growth market that is growing rapidly: According to forecasts, the AI market will double by 2030 – to almost 30 billion euros.

The German economy is already well positioned when it comes to AI, but the Federal Republic only ranks eleventh when it comes to AI capabilities. In addition to the infrastructure, the investments should also flow into further training programs that are intended to impart "digital skills". Part of this is a professional certificate for generative AI, which can process language, images and program code. The new training offerings are intended to reach up to 1.2 million people. The software group works with IT service providers and associations, educational institutions and non-profit organizations.

"We want to enable the German economy to benefit from AI in order to continue to expand its global leadership position in terms of competitiveness," emphasized Microsoft Vice President Brad Smith. He compared the importance of AI, which his company is currently trying to establish with great vehemence, with the introduction of electricity. Many German companies are currently in the process of deeply integrating AI into their operational processes in the form of Microsoft offerings, including Siemens, Boehringer Ingelheim and Bayer. Siemens, for example, is building a digital assistant for them using Microsoft technology Industry, Bayer is experimenting with the copilot for office software and Mercedes is partially integrating ChatGPT into the cockpit in the USA.

The software company wants to massively expand its data center capacities for applications in the field of artificial intelligence (AI) and cloud computing in Germany, explained the Microsoft vice president. The new data centers are intended to meet the growing demand for AI-specific computing power and cloud solutions and are also used to train new AI models and services.

According to dpa information, the investments will go primarily to North Rhine-Westphalia, where Microsoft wants to set up a new region for the cloud business with data storage. The group is looking for physical proximity to major customers such as Bayer and RWE in order to keep data transit times between the data centers and the on-site computers as short as possible. North Rhine-Westphalia Prime Minister Hendrik Wüst (CDU) sees the move as "a strong signal for Germany and a great contribution to structural change in the Rhenish region." With this decision, Microsoft is making a significant contribution to sustainably driving forward the transformation of the economy in North Rhine-Westphalia. The fact that a global player makes such an investment in North Rhine-Westphalia is a sign of trust and concrete location policy, emphasizes Wüst.

In addition, the Rhine-Main region of Hesse will also benefit from Microsoft's billion-dollar investments. There are numerous expandable data centers in the Frankfurt region due to the proximity of the large Internet node DE-CIX, which connects over 1,000 subnets. With the existing Microsoft cloud region Rhine-Main, Frankfurt is already the leading location for data centers.

Microsoft is one of the leading providers of the new generation of AI, as the software company secured early access to the technology through a close partnership with the start-up OpenAI, which has been booming since the publication of the text robot ChatGPT.

"We are very impressed by how much demand for artificial intelligence services is increasing in important areas of the German economy," says Brad Smith. He spoke of doubling the capacity of the local AI infrastructure.

Given the debate over AI's high power consumption, Smith promised that data centers should be powered by green electricity. Microsoft has set itself the global goal of powering its entire operations, including data centers, from renewable energy by 2025. The investments in Germany should also include solar and wind power plants, so that more electricity flows into the German network than is consumed by the new data centers, explained Smith.

Microsoft's Germany boss Marianne Janik made it clear that the investment was not tied to subsidies from the German state. And the company vice president emphasized that, given limited government budgets, it is now up to companies to take initiative and invest.

The market for AI as a Service is projected to grow from USD 9.3 billion in 2023 to USD 55.0 billion by 2028, at a CAGR of 42.6% during the forecast period. AI as a service refers to the provision of AI tools and platforms by third-party providers to businesses that want to integrate AI into their operations. It provides companies with access to pre-built AI models, APIs, and other tools that can be easily integrated into their existing systems. The growth of AI as a service (AIaaS) is being driven by the increasing demand for AI-powered solutions across industries. The availability of big data and the rise of cloud computing have made it easier for businesses to adopt AIaaS.

Major vendors offering AI as a Service solutions and services across the globe are IBM (US), Microsoft (US), Google (US), AWS (US), FICO (US), SAS Institute (US), Baidu (China, SAP (Germany), Salesforce (US), Oracle (US), Iris.AI (US), Craft.AI (France), BigML (US), (US), (US), (Canada), RainBird Technologies (UK), SiftScience (US) DataBricks (US), CenturySoft (India), DataRobot (US), Alibaba (China), Tencent (China), Dataiku (US), Yottamine Analytics (US), Tecnotree (Finland), Cloudera (US), and (KSA).

Find out more about AI as a Service market:

AI as a Service Market by Offering (SaaS, PaaS, IaaS), Technology (Machine Learning, Natural Language Processing, Context Awareness, Computer Vision), Cloud Type (Public, Private, Hybrid), Organization Size, Vertical and Region – Global Forecast to 2028

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