Chancellor Olaf Scholz said AI technology had “great potential” in the country as it tries to position itself as a leader in the field.
The founder of Aleph Alpha, a European rival to ChatGPT, was among AI bosses invited to a cabinet away-day on Tuesday.
They held talks on using AI to help digitise a German government machine where paper, pens and fax machines are still prevalent.
AI could bring a “great transformation” in the way Germany uses digital tools, said Mr Scholz.
He said the government’s goal was to “make these advances usable for our country – that goes for digitisation but also for AI in general”.
The German AI Association, an industry body, urged the government on Tuesday to adopt a “new mindset” amid what it called a “standstill in digital policy”.
Aleph Alpha has been signed up to an “AI park” in western Germany that is envisaged as a home of German start-ups.
The German company touts its “sovereign, European AI technology” as compliant with strict EU data regulations.
It also claims its model can check its output against “verified facts” – addressing the fact that AI bots such as the American ChatGPT sometimes make factual blunders.
Germany’s aim is to “bring our European values” into the growth of AI, a government spokesman said. The health system is also slated for an AI revamp.
A foundation belonging to Dieter Schwarz, the founder of supermarket chain Lidl, has put €50 million ($54 million) into the AI park.
“Many of the researchers, also many of the start-ups that are active in this area come from our country,” said Mr Scholz, who has spoken of bringing a “new German speed” to government policy.
Ministers have promised a “digital decade” in which health records are digitised, half the households are connected to fibre-optic internet and people can use a virtual ID to access government services.
Britain also has ambitions to be an AI leader. UK Prime Minister Rishi Sunak plans to host a November summit on the issue at Bletchley Park, known for its role in code breaking during the Second World War.