Merz says Germany must preserve 'digital sovereignty' in AI era

BERLIN, Nov 2 (Reuters) - Germany and Europe must move more quickly to develop their own artificial intelligence capabilities to protect their "digital sovereignty" in an era being transformed by the new technology, Chancellor Friedrich Merz said on Monday.

Speaking at a conference on artificial intelligence in Berlin, Merz said nations risked surrendering control to outside providers as the new technology becomes embedded in the economy.

"That is why we must, at all costs, avoid becoming entirely dependent on third parties when it comes to developing and using this technology," he said.

"And that is why the issue of digital sovereignty in the context of AI becomes a truly existential question," he said.

Adapting to the change would require "an enormous technological and organisational effort, a far-reaching modernisation of our state and our economy," he said, pledging to accelerate efforts to digitalize the economy.

"After all, the aim is to be able to produce and manage technologies independently, securely and autonomously throughout the entire value chain, from hardware to software," he said.

Merz appointed a minister for digitalization and modernization when he took office last year and his government has vowed to intensify efforts to make up the technological lag with European economies that have moved faster, including the Netherlands and Denmark.

Germany established a national AI strategy as far back as 2018 and many German firms, including a wave of startups, have adopted and integrated the technology. But critics say it has been slow to build the digital infrastructure, skills and domestic technology sector needed to exploit it fully.

The Ifo economics research institute said Germany, where many public administrative bodies and companies still rely heavily on physical paper correspondence and record keeping, was still not ready to take full advantage of a boom in artificial intelligence.

It pointed to Germany's small high-tech sector, poorly digitalized public services and skill shortages.

Merz, who made a five-day visit last week to Singapore, Japan and South Korea, highlighted Germany's strengths in industrial engineering but said it would also seek to work with like-minded partners such as Canada and France.

(Reporting by James MackenzieEditing by Peter Graff)