Major AI expansion

Microsoft billions for German data centers

Microsoft is pumping billions into AI research and server farms. The company has now announced that it will invest 3.3 billion euros in data centers in Germany within two years.

(Bild: stock.adobe.com)

German Chancellor Olaf Scholz is not often spoiled by good news these weeks. But at Microsoft's representative office in the capital on Thursday, the SPD politician heard a message that visibly brightened his mood: The US software giant will invest almost 3.3 billion euros in Germany by the end of 2025 to massively expand data center capacities for applications in the field of artificial intelligence (AI).

"This is a good morning for Germany," said the Chancellor. Measured by the size of the country, the Federal Republic is definitely the most successful export economy in the world. However, Germany is not only a country that trades with the whole world and invests everywhere, but also facilitates investment in its own country.

Neither the federal government nor the two federal states of North Rhine-Westphalia and Hesse, which are the main beneficiaries, had to make any financial advance payments for Microsoft to release the enormous investment sum. "We will not receive any subsidies and have not asked for any," said Microsoft President Brad Smith in Berlin.

We will not receive any subsidies and we did not ask for them.

Microsoft-Präsident Brad Smith

Proximity to major German customers
Microsoft does not break down exactly in which regions of Germany the money will be invested over the next 22 months. However, according to Microsoft Germany boss Marianne Janik, the majority of the funds will flow into the Rhineland region. Microsoft will also be setting up a new cloud region in North Rhine-Westphalia (NRW). The company is thus seeking proximity to major German customers such as Bayer and RWE in order to keep the data latency between the data centers and the applications as low as possible. Various high-speed lines also run through the region, providing good connections to neighboring European countries such as Belgium and the Netherlands.

NRW Minister President Hendrik Wüst (CDU) described Microsoft's investment as a "strong signal for Germany and a great contribution to structural change in the Rhineland region". With this billion-euro 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 is making such an investment in North Rhine-Westphalia is a sign of trust and the result of concrete location policy."

Hesse will also benefit from the Microsoft investment. The Rhine-Main region is Germany's leading location for data centers due to the large DE-CIX Internet node in Frankfurt. The existing Microsoft cloud region Rhine/Main will be further expanded. Hesse's Minister President Boris Rhein (CDU) said that his federal state is a strong and dynamic location with good framework conditions for the information and communications industry and one of the leading locations in Europe. With this investment, Microsoft is also strengthening the Rhine-Main region as a driver of innovation for industry and finance.

Few jobs directly in data centers
However, only a limited number of new jobs will be created for the operation of the new data centers. However, Microsoft President Smith made a different calculation in Berlin to describe the effects of the billion-euro investment. On the one hand, a lot of people are needed to build these data centers and develop the infrastructure. The number of jobs needed to operate the data centers would then actually be low. However, the real job growth will take place elsewhere: "If AI does what it should do, then it will also help all other areas of the economy to become more innovative and globally competitive. It will also contribute to employment growth."

Germany is well positioned in this respect. The use of artificial intelligence in companies is an early indicator of positive economic development. Here, Germany is in second place in Europe per capita behind the UK. "Germany is naturally expected to deliver high figures because it is the largest economy in Europe."

ChatGPT now widely known
According to a study published on Thursday by Initiative D21, the majority of people in Germany participate in the digital world and are able to make use of its opportunities in a self-determined way. At the same time, however, the ability to keep pace with digital change in the future is declining. When it comes to artificial intelligence applications, people in Germany are most likely to have had experience with the text robot ChatGPT from Microsoft partner OpenAI. Almost one in five respondents said they had already used ChatGPT in the first six months after its launch.

Against this backdrop, Microsoft's investment program also includes an education and training offensive. Up to 1.2 million people are to be familiarized with the possibilities of AI. Microsoft Germany boss Janik announced that the company would be cooperating with various institutions and organizations such as the Federal Employment Agency, the employers' association and various non-governmental organizations in a tried-and-tested network.