"There are indications that Verizon is legally required to provide certain things to the NSA, and that's one of the reasons the cooperation with Verizon won't continue," German Interior Ministry spokesman Tobias Plate told AP. Verizon has provided Internet service to a number of German government departments but not intelligence to agencies according to Plate.
Germany's current contract with Verizon will expire in 2015, he said.
"Verizon Germany is a German company, and we comply with German law," said Verizon Germany managing director Detlef Eppig in a statement, which also referred questions to a post on the company's policy blog that it says outlines "the inability of the US Government to access customer data stored outside the US."
While various officials, including Merkel, have expressed concern about U.S. spying, a report from German magazine Der Spiegel last week suggested a close relationship between the NSA and German intelligence agencies.