In a low-profile but significant development, the IT and cloud entity established by the German retailer Lidl in 2021 is now approaching €2 billion in annual revenue. Renamed Schwarz Digits after becoming independent in 2023, this business has quickly positioned itself as one of Europe’s leading cloud providers. By comparison, the French cloud provider OVH generated less than €900 million in revenue in 2023.

According to an article in the Financial Times, executives from the Schwarz Group, which boasts over €167 billion in annual revenue, draw parallels between their journey and that of Amazon. "We didn’t start with a commercial goal in mind; we just wanted to meet our own needs," explains Christian Müller, Co-CEO of Schwarz Digits. He adds that the entity is experiencing rapid growth, serving clients such as SAP, Bayern Munich football club, and the Port of Hamburg.

Investments in AI

When the group decided to move to the cloud, it sought a European solution to avoid storing data in foreign jurisdictions. However, it soon realized that no provider could fully meet its requirements. This led Schwarz Group, the parent company of Lidl, to develop its own cloud architecture, launched in 2021. The retailer quickly discovered that many other German companies shared its concerns: modernizing their IT on cloud architectures without becoming dependent on American or Chinese providers.

Schwarz Digits is active not only in cloud computing but also in cybersecurity, a field in which Schwarz Group has developed expertise through the acquisition of Israeli cybersecurity firm XM Cyber in 2021 for $700 million. Since then, the retailer has also invested in artificial intelligence (AI) through a partnership with the German start-up Aleph Alpha. In November of last year, Schwarz Group participated in a fundraising round for the German tech company.

Co-led by Christian Müller and Rolf Schumann, Schwarz Digits employs around 7,500 people and includes Schwarz IT (IT management), Schwarz Digital (development), StackIT (the in-house cloud service), XM Cyber, the e-commerce entities of Kaufland and Lidl stores, Schwarz Media, and a digital creative agency. The in-house cloud service recently received the C5 cybersecurity certification (Cloud Computing Compliance Criteria Catalogue) from Germany’s Federal Office for Information Security (BSI).