In its regular analysis of the world's top listed companies, the auditing and management consultancy EY comes to a sobering conclusion for Germany: no European company is among the top 10 and, for the first time since the surveys were conducted in 2006, no German company makes it into the top 100. Significantly, the most valuable European company, the Swiss company Nestlé, comes from the rather "low-tech" food sector. The best-placed German company is the software group SAP with a market capitalization of USD 106 billion in 113th place, followed by Deutsche Telekom in 120th place with a market capitalization of USD 98 billion. As it is well known that the future is traded on the stock exchange, internationally oriented investors see Germany and therefore German companies as clearly lagging behind.

Despite the sharp price corrections due to interest rate and economic fears in the first half of 2022 - particularly in the tech sector - American and Asian tech companies dominate the ranking. Of the 23 technology companies currently in the top 100 ranking, 17 are headquartered in North America, four in Asia and only two in Europe. The EY consultants draw a critical conclusion for Europe and Germany: "From the perspective of many investors, Europe continues to suffer from a lack of promising technology companies of global stature. The USA clearly sets the tone in the IT sector, many of these tech companies are highly profitable and are driving forward the digitalization of the economy and all areas of life. At best, Asian companies still play a role as shapers of this technological change - European companies, on the other hand, hardly play a role at all, and this is clearly reflected in the stock market ranking."

While European and German companies are improving existing business models in iterative stages with less risk, American and Asian companies have succeeded in creating completely new and, above all, digital business models from scratch, usually in the form of high-growth tech companies. The same applies to electromobility, where Tesla from the USA or BYD and Nio from China are challenging Germany's flagship industry.
But how can Europe now successfully shape the much-vaunted second half of digitalization? The consultants at EY still see huge "untapped potential" in digitalization that can be exploited. "The way we produce in the future will continue to change. German industrial groups can play a decisive role in shaping this development and stand up to US companies in this area."

Big tech and artificial intelligence

The high stock market valuations of American and Asian tech companies and their bubbling profits in the billions are the elixir for strategically oriented investments in the future. According to a study by consultants at PwC, tech companies Amazon, Alphabet, Apple, Samsung and Microsoft are spearheading research and development activities. Only the German car manufacturer VW can break into this phalanx and keep up. The most recent example of a bold strategic acquisition is Amazon's takeover of the robotics company Roomba, manufacturer of the well-known vacuum cleaner iRobot. The e-commerce giant's USD 1.7 billion acquisition of the intelligent vacuum cleaner manufacturer is a further indication of the company's ambitions in the smart home sector. Even more important than iRobot's technology is its data treasure trove of 40 million customers and their homes. Loosely based on the bestselling author Daniel Kehlmann, we can speak of Amazon "surveying the living room". In the future, Amazon could use food crumbs to display targeted advertising for food and sweets that the individual consumer favors - advertising can no longer be more personalized. As Amazon itself is also a supermarket operator, the company can serve the entire customer value chain and analyze the data points it collects in a targeted manner.

Amazon's strategy has something of the Lego building block concept: take the Amazon platform, enrich it with targeted acquisitions and pack the individual services into attractive value-added services. Amazon Prime is the prime example: The service focuses on the preferred delivery of ordered goods, but it is actually linked to the streaming service. Amazon now has more than 200 million Prime members, who paid around 25 billion US dollars in fees in 2020. In the wake of rising inflation, Amazon is now significantly increasing the fees for the service.

General conditions in Germany

In a survey conducted for the second time since 2018, the VDI wanted to find out from its members how artificial intelligence is reflected in the day-to-day work of engineers and what progress has been made. The results are sobering: according to the VDI, the forecasts from the survey conducted four years ago and the expectations expressed at the time have "clearly not" been fulfilled to date. The majority of respondents also stated that their respective employers do not yet offer any AI-based products or services.

Artificial intelligence solutions are primarily used in the areas of data analysis and predictive maintenance. Ten years after the invention of the term "Industry 4.0", German industry is still struggling to offer a digital transformation in the form of digital paid services. The German automotive industry is at least taking a leaf out of arch-rival Tesla's book and offering additional digital services as a software subscription. Daimler CEO Ola Källenius expects his company to contribute one billion euros to sales by 2025.

AI use cases in the industry

The author: Thomas Rappold is a technology investment expert, FinTech entrepreneur and international bestselling author.

© I&S Internet & Security

For German industry, AI use cases are on a plate. The decarbonization of the economy requires intelligent digital models. Making more out of less and using resources more efficiently is the order of the day. In a Bitkom survey, 45% of the companies surveyed stated that they wanted to be completely climate-neutral by 2030. For 77%, digitalization has led to a reduction in CO2 emissions. Savings potential and therefore lucrative areas of application for AI are available to industry in the segments of intelligent mobility control, heating systems and smart grids. By using AI-based productivity tools, industry can combat demographic change and the shortage of skilled workers. Microsoft with 'Github Copilot', but also Amazon with 'Code Whisperer' and Google with the 'AI Coding Assistant' show how software development can be increasingly automated and made more productive.