German Companies Depend on International Data Transfers Amid Legal Uncertainties

A substantial majority of German companies engage in transferring personal data beyond European Union borders, underscoring the critical role of international data flows in the nation's digital economy. According to a recent survey by the Digital Association Bitkom, 62% of German businesses transfer personal data internationally, with primary destinations including the United States (61%), the United Kingdom (43%), India (24%), and Japan (13%). Notably, the United States remains the most common recipient, with companies predominantly relying on standard contractual clauses as the legal framework for these transfers.

These data transfers serve essential business functions, primarily to facilitate access to cloud services (96%) and communication systems (90%). The transfers support partnerships with external service providers (45%), business partners (41%), and subsidiaries or corporate units (19%). However, 78% of companies express concern over the lack of clear legal certainty surrounding these international data exchanges, signaling a critical need for regulatory clarity.

The consequences of halting such data flows would be severe. Around 75% of businesses anticipate increased operational costs, while 71% fear losing competitive edge if cross-border data processing outside the EU were to cease. Susanne Dehmel from Bitkom emphasized that stopping international data transfers would immediately impact German companies' competitiveness.

Moreover, while German companies show a relatively good level of digital sovereignty with an average score of 65.8 points, four out of five lack a defined strategy to strengthen it, pointing to a significant gap in addressing digital autonomy amidst growing data transfer demands.

This evidence highlights both the indispensable nature of international data transfers for German businesses and the urgency for legal frameworks that provide certainty. Without such frameworks, companies face risks of increased costs and competitive disadvantages in an interconnected global market.