Perspectives

2023 has proven to the world that artificial intelligence will be one of the technologies to truly transform our professional and personal lives, raising both optimism and concerns. In Germany, AI’s salience is highlighted by the extensive political discourse and the rapidly growing number of AI startups. Currently, the country is home to over 500 startups, with Aleph Alpha often labelled as one of Europe’s most promising AI startups.

Building on our previous insights on AI governance in the EU and US, below we explore the discourse on AI governance in Germany, and at the EU level, for stakeholders seeking to navigate regulatory developments and harness the potential of AI technology.

Germany’s National Approach to AI

AI has long been a political agenda item in Germany. A cornerstone of the Federal Government’s approach to AI is the National AI Strategy, presented in 2018, emphasising a pragmatic yet cautious attitude to AI. The strategy seeks to render Germany a central AI hub in Europe by promoting the technology’s responsible development and anchoring it within society through a broad public discussion. In 2020, the strategy was updated to further capitalize on national and international cooperation. This pragmatic understanding of AI continues to be promoted by the current coalition government consisting of the Social Democrats, the Greens and Liberals. Most recently, the Federal Ministry for Education and Research published the AI Action Plan that builds on the AI Strategy.

In practice, the Federal Government seeks to invest a total of EUR 5 billion by 2025. Much of the investments are distributed to a diverse group of initiatives ranging from research to the development and deployment of AI tools in small and medium-sized enterprises (SMEs) and the public sector. In addition, the Federal Government initiated the Federal Agency for Disruptive Innovation (SPRIN-D), a de-facto public sector venture fund, to invest in future technologies. The Innovation Park Artificial Intelligence (Ipai) in Heilbronn, branded the “global home of human AI,” aims to become the largest ecosystem for AI in Europe. It is supported by the state government of Baden-Wuerttemberg, which is among the Federal States with the highest number of successful SMEs and a growing digital hub.

Germany Sealing Cooperation at the International Level

On the international level, the Federal Government is proactively seeking cooperation with partners such as France and the United States and promotes transnational discussions asserting that effective AI governance demands transnational cooperation. At the same time, Germany follows a pragmatic approach to the EU’s proposed AI Act, stressing the challenge of regulating AI in a way that ensures its trustworthiness, safety and compliance with fundamental rights and values. Federal Digital Minister, Volker Wissing, emphasised to “not simply regulate as much as possible” during a visit to the United States in October.

Most recently, Germany also reached a consensus with France and Italy on regulating AI, summarized in a not-yet-published joint paper from November 2023. Focusing on so called foundational models, the paper calls for voluntary commitments without initially sanctioning violations. The agreement is expected to influence negotiations at the EU level around the AI Act, which is expected to be passed in December 2023.

The Need for Startups to Understand AI Governance

The rapid development of AI technologies, accompanied by evolving regulatory frameworks, poses challenges for both governments creating regulations and AI companies having to adhere to them.

For startups, investment in relevant expertise is essential to remain informed about the regulatory environment. They should not underestimate the importance of keeping up with and engaging in governance discourses — not least because of the potentially significant impact regulations can have on business models.

For governments, on the other hand, it is important to provide a pragmatic legal framework. This will create positive effects, such as enhancing the reputation and trust of AI technologies, attracting investments and customers, as well as fostering collaboration and standardization.

To foster such positive effects in regulating AI technology, governments rely on input from AI companies to understand the opportunities and challenges associated with the technology. Discussions in Germany show that there is still a gap in understanding the business models of AI companies and translating this knowledge into regulatory approaches. Startups should take advantage and fill this gap by proactively engaging with the regulatory environment they are operating in.

The first step would be to monitor political and regulatory developments and to conduct early and regular risk assessments to understand the regulatory developments and their associated implications. In addition, startups should engage actively in discussions to communicate about their company and products and position themselves as thought leaders in the sector. Participation in associations and other institutions also offers pathways to actively shape the discussions around AI.

If you are interested in discussing AI and its potential implications on your business, feel free to reach out to Trilligent. As a global advisory and strategic communications firm, we specialize in assisting disruptive tech companies in navigating the complex international regulatory environment and making their voices heard vis-à-vis political stakeholders. For more information on Trilligent, visit trilligent.com or get in touch at: contactus@trilligent.com.

*The featured image for this post was generated with GPT-4.