Unused Strength: The Role of the State in the AI Transformation (Wirtschaftsdienst)

Summary

• In 2025, venture capital investors from the EU-27 invested about $13.1 billion in AI, compared with $119.8 billion from US investors.p.1
• Estimated compliance costs of €6,000 to €7,000 per AI application equal about 10% of value added for micro-enterprises, versus 0.01% for large firms.p.2
• Around 5.5 million people work in the German public sector, and a third are due to retire within ten years.p.3
• Of 32,287 start-ups considered in 2025, only 105 won public contracts, or 0.73% of all recorded awards.p.3
• Only 11% of German start-ups have ever taken part in a public tender and 7% have won at least one contract.p.3
• The sale of Cognigy to NiCE for about $955 million in 2025 is considered one of the largest European AI exits.p.4

Key insights

1. The article argues that the state acts as regulator, as customer and as enabler of AI, and that these roles could be used better.p.1
2. The national AI law adds no prohibitions or risk categories beyond the EU AI regulation and names the Bundesnetzagentur as market surveillance authority.p.1
3. The compliance burden weighs harder on small firms: costs of about 10% of value added for micro-enterprises against 0.01% for large firms.p.2
4. The small mid-cap category covers firms with fewer than 750 employees and at most €150 million annual turnover.p.2
5. Start-ups' success rate in public procurement was 14.9% in 2025, practically equal to the 14.8% of established firms.p.3
6. The barrier for start-ups lies in upstream hurdles such as reference requirements, not in the award decision itself.p.3
7. In more than half of takeovers of German start-ups the buyer was foreign, and almost a quarter of all takeovers went to US firms.p.4
8. 41.5% of German AI start-ups originate from academia, yet growth capital lags far behind the US.p.5