Patrick Brady, director of engineering, Android at Google, talks about the company's plans with cars | Getty Google vs. the German car engineer Germany’s cultural sensitivities about data privacy may impair its carmakers’ ability to compete with American rivals.

BERLIN — "Dieselgate" is not the biggest threat to the future of the proud German auto industry. Silicon Valley is.

Days before Volkswagen's emissions-cheating scandal broke last month, the newspaper Die Welt ran a story headlined “Google is building the car – and Daimler is their supplier,” putting one of the great brand names of German industry in an unusually subservient role to the American digital-era titan. And Apple and Google continue to move aggressively into their territory.

The anxiety in the German auto industry, growing for years and unchanged by the troubles at VW, is that the speed of technological change is catching them flat-footed. Technology detonated the business models of the travel, publishing and telecommunications industries. If it does the same to the cars, the impact on Germany's economy, politics and even its very identity will be far-reaching.

“Our primary goal has to be that in the globalized world that we live in, Germany remains at the wheel in the car industry,” said Holger Weiss, former chief executive of Aupeo, a Berlin-based digital radio provider.

For decades, the car industry has been driving the German economy. Some 775,000 people in Germany work in the industry, which had sales totaling €384 billion last year.

The VW scandal came at a time when the industry was already grappling with the technological revolution. Both are now setting the government agenda. For example, during his visit to the U.S. this week, Germany’s transport minister jumped from talks in Washington about Volkswagen, then went to a car-testing site in Detroit, and on to California to visit a BMW research lab and to talk to Google and Cisco.

Nein to Google Maps

Germany's cultural sensitivities about data privacy is a political and business minefield for German carmakers, possibly stalling their ability to keep pace with their American rivals.

When Google Maps debuted in 2010, for example, hundreds of thousands of residences were blurred at the request of homeowners and renters. Four out of five Germans were reluctant to share information with online-service businesses because they “just want to maintain [their] privacy,” according to a study last year from Frog, a global product strategy company.

"This is definitely a concern — and as technology is evolving, it will become a problem. The U.S. has looser privacy laws than the EU, and German privacy laws are even stricter than the European standards,” said Weiss, the former CEO of Aupeo.

Panasonic acquired Aupeo in 2013 and focused its business on providing car makers with Internet-based services for its vehicles.

In a little more than five years, cars and trucks have become connected to the Internet, stream music, receive traffic updates, send alerts, and drive themselves. Last year, 8 percent of cars worldwide, or 84 million, were connected to the Internet in one way or another, according to BMW. By 2020, that number will grow to 22 percent, or 290 million cars.

As cars go high-tech, tech giants are exploring ways to move into the market. Google has been working on a self-driving car since 2009. In September the company hired engineer and auto industry veteran John Krafcik, previously at Ford and Hyundai, as chief executive of the project.

Apple, meanwhile, has accelerated its plans to build an electric car and reportedly plans to ship the first vehicles in 2019.

The data trap

Connected cars will produce unprecedented amounts of data, such as how far the car has traveled and where, how much fuel it consumed and when it is due to for its next inspection. Data like that can be valuable to service providers, like insurers, travel agents and restaurants, and generate revenue for tech companies that provide it.

This kind of massive data collection will hit right at an open nerve in Germany.

In mid-October, Germany passed a data retention law, which allows law enforcement agencies to access the metadata of phone calls, among other things, of certain individuals they are investigating. German Justice Minister Heiko Maas said the law would only intrude on people's privacy "to an appropriate extent," but critics were up in arms.

"Some people have the impression that, so far, we have only been bending metal, but that's not the case. For many years, we've had our own engineers working on IT solutions for our cars." — Daimler's Bernhard Weidemann.

"Data retention means that the presumption of innocence is being reversed," politician Malte Spitz of the opposition Green party told far-left newspaper Neues Deutschland, "Everyone is being surveilled — everyone who uses a phone."

In theory, data generated by connected cars could be highly profitable for the companies that collect them. It remains unclear if and to what extent auto makers in the country will be allowed to assess and utilize this data.

'We're not afraid'

The auto industry has been making strategic investments to stay in the game.

In August, for example, German automobile giants Audi, BMW and Daimler — normally fierce rivals — joined forces to buy the mapping service Nokia Here.

"It's not a new phenomenon that car makers cooperate with each other in fields where it makes sense," said Bernhard Weidemann, a Daimler spokesperson.

"Some people have the impression that, so far, we have only been bending metal, but that's not the case. For many years, we've had our own engineers working on IT solutions for our cars," Weidemann added. “In some areas, we will talk to those companies and possibly work together on certain aspects, and in other areas we won't."

But as an industry insider observed, "They surely wouldn’t have moved as quickly as they did, if it wasn’t for Apple and Google.”

Thomas Weber, the head of Daimler, said recently, “I look forward to Google (entering the market,) and I am totally relaxed … at Daimler, we’re not afraid.”

Maybe they should be.

German Vice Finance Minister Jens Spahn quipped during a speech at a tourism industry summit in Berlin this month, “That’s what Nokia said seven years ago, ‘I am not afraid of Apple’."