t's well-known that retired political officials like to be compensated with five to six-figure sums for their whimsical evening lectures after leaving office. However, if one wishes to host the current Chancellor Olaf Scholz, billions must flow. "For major investments," the Chancellor explained last Thursday to his host, Microsoft's President Brad Smith, "the Chancellor himself might make an appearance. Such is the case with this one."
"This one" was Microsoft's announcement to invest more than three billion euros in the Rhineland and Rhine/Main region this year and next, to bring more data center capacity to the country, urgently needed for the growing use of artificial intelligence locally. "The investment primarily goes into two areas," Brad Smith clarified: "The first will enable us to expand the AI and data infrastructure, allowing Germany to truly leverage AI to enhance the competitiveness of its businesses. We need to keep pace with the rapidly increasing AI demand from German users." And secondly, "we are launching a new qualification program. It's a partnership with German government agencies, employers nationwide, and non-profit organizations. The goal is to reach 1.2 million people in Germany this year and next."
In Germany - the land of hesitators and procrastinators? Why not in Ireland, where tech giants were long enticed with tax incentives to set up energy-intensive data centers? In an exclusive interview with Bild newspaper, Microsoft's President explains the external reasons for this location choice: "What is the source of German economic strength? It's the outward-looking export orientation, not just of big names like Mercedes, BMW, or Bayer," praises Brad Smith of the DAX companies, but quickly adds, "Strength also comes from the small and medium-sized enterprises that form the production core. For me, this has long been the fundamental strength of the German economy, and it remains very much alive.
And when we look at the key measures of competitiveness - investments and AI usage - Germany is a leader. In Europe, Germany ranks second in per capita AI usage in organizations. I think this should give people hope and confidence."
Indeed! It takes someone from across the pond to remind us of our strengths. From Ireland, Microsoft couldn't support the companies that back the world's third-largest economy here with sufficient and timely computing power. The latency, or response times from the cloud, would be too high. However, one of the world's most important internet hubs already exists in the Rhine/Main area. Microsoft invests in Germany because it invests in AI for its key customers.
And here, the Chancellor is mistaken when he says that Microsoft's announced commitment is in line with the commitments of Intel and Tesla, who are building giga-factories with billion-dollar investments. The difference is that Intel and Tesla could have set up their manufacturing facilities anywhere in Europe - even if it might be less difficult in Germany than elsewhere to recruit the needed skilled workforce. Decisive for the decisions of Intel and Tesla are, not least, the billion-dollar tax incentives offered to both companies by the federal government. As far as is known, nothing comparable has occurred with Microsoft.
Microsoft is seeking proximity to key customers. It's the prospect of equipping 1.2 million people with AI know-how within two years in a country that, despite an educational crisis, has a superbly trained workforce. In the end, everyone benefits - the people, the business location, Microsoft - and the key customers in small and medium-sized enterprises and in the DAX.