eco Industry Monitor: In Spite of Crises, the Digital Industry in Germany Remains on Track for Growth

eco Chair of the Board Oliver Süme: “The Internet industry is part of the solution for sustainable transformation of the economy. Politics must not stifle the innovation potential of AI.

  • The Internet industry is recovering faster than expected from the effects of the Covid-19 pandemic and Ukraine crisis. A growth rate of 14% expected is now expected
  • The revenue level is projected to increase to around 280 billion Euro by 2025
  • The industry segments with the highest growth rates are found in Services & Applications, benefiting from strong growth in the demand for digital services
  • Artificial intelligence (AI) promises significant growth in all industry segments in the medium to long term
  • Data centres play a significant role in sustainable digitalisation and, due to AI, are also expected to experience a growth rate of 20% in 2024

Persistent inflation and the energy crisis resulting from the Russian war of aggression are delaying the economic recovery of the Internet industry. Nonetheless, the rapid development in the field of artificial intelligence (AI) is a factor that is projected to increase the level of revenue to around 280 billion Euro by 2025. This is the forecast of the latest update of the “Index Monitor of the Internet Industry”, just published by eco – Association of the Internet Industry and Arthur D. Little. In this update, the analysts show that they expect stronger growth from 2024 onwards, driven in part by the further increase in consumer spending and real wages, and supported by current developments and technological advancements based on artificial intelligence. With this being the case, the current growth forecast for the years 2020-2025 has been revised upward, with analysts now expecting an average annual growth rate of 14 per cent (compared to the 12.2 per cent forecast in 2022). The analysis took into account both general macroeconomic trends and specific developments in various sectors of the Internet industry.

Even if artificial intelligence (AI) will, in the short term, just have a minor impact on the revenue of the Internet industry, analysts expect increased effects in the medium term and a significant contribution to growth in the long term. “Now is the time when Germany can prove its innovative strength and generate significant growth effects in the medium term through the use of artificial intelligence,” says eco Chair of the Board Oliver Süme. “Rapid implementation based on AI will ensure long-term competitiveness in international comparison and contribute to achieving growth targets.” Moreover, he is of the opinion that AI can help achieve sustainability goals by focusing on sustainable data sources and infrastructures. “The Internet industry is part of the solution for sustainable transformation of the economy. Policymakers must not stifle the innovation potential of AI,” Süme goes on to say.

Expected return to growth rates of 10 to 11 per cent

The projected growth rates for the years 2022 and 2023 had to be corrected downwards, given that inflation is expected to last longer and the economic recovery will be delayed until the third quarter of 2023. But for 2024 to 2025, the analyses promise a return to growth:

“We expect a return to growth rates of 10-11 per cent in 2024-2025, driven by a favourable business atmosphere and an expected rise in consumer spending and real wages,” says Lars Riegel, partner at consultancy Arthur D. Little (ADL). “AI has reached another milestone and has already begun to significantly transform most industries.” Riegel expects increased public and private investment in AI to accelerate innovation. The analysis suggests that, in Germany, the AI-enabled work can boost productivity by 0.8-1.4 per cent annually. With LLMs (Large Language Models), today 15 per cent of all work tasks could already be completed more quickly and with the same quality; this share could grow to 56 per cent in the future.

Industry segment with highest growth rate: Services & Applications benefit from continuing momentum towards digitalisation and teleworking

According to the Index Monitor, the highest growth rates are expected from the “Services & Applications” industry sector. In what is known as the “Layer 2” of the eco/ADL layer model of the Internet industry, the introduction of AI at Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) companies is accelerating medium-term and long-term revenue growth. This will lead to an average growth rate of 19.4 per cent from 2020 to 2025.

In the “Services & Applications” industry sector, the “cybersecurity” segment is also growing strongly, from a revenue volume of 11 billion Euro in 2023 to 13 billion by 2025. “Secure digital infrastructures are the foundation for further growth of the Internet industry. The IT security and trustworthiness of networks and IT services must be systematically fortified and expanded. It is therefore important for policymakers to pursue a joint approach for more IT security in dialogue with users and providers,” says eco Board Member for IT Security, Prof. Norbert Pohlmann.

Data centres are drivers of sustainable digitalisation

It is not only artificial intelligence that counts towards sustainability goals; according to the analysis, data centres also make a significant contribution to sustainability by becoming increasingly energy efficient and in providing waste heat for heating residential, office and industrial buildings. “As the backbone of digitalisation, data centres are the foundation of a forward-looking and digitally sovereign industry,” notes Volker Ludwig, Deputy Spokesperson of the Alliance for the Strengthening of Digital Infrastructures in Germany and Senior Vice President and Managing Director Digital Realty DACH. “The industry is investing in the modernisation of existing data centres and the construction of new ones in order to make room for sustainable digitalisation. Resource conservation plays a crucial role in this. The utilisation of waste heat and electricity from renewable energies are two essential steps towards an even more sustainable industry.”


eco Index Monitor of the Internet Industry – Update 2023


Index Monitor of the Internet Industry: Influence of Artificial Intelligence - ADL & eco Association