Germany Nixing Verizon Contract Highlights Economic Impact Of US Spying

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The German government announced it was pulling its contract with Verizon due to fears the Internet provider was allowing U.S. agencies to spy on the government’s communications, the Associated Press reported Thursday. The news highlights the negative impact controversial government surveillance programs have on American businesses abroad.

Reports of the U.S. spying on German citizens sparked backlash in Europe last year in the wake of leaks from former government contractor Edward Snowden about the scope of NSA surveillance programs. News that German Chancellor Angela Merkel was targeted by the programs strained relations between the two nations.

“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,” Interior Ministry spokesman Tobias Plate told the Associated Press.

The announcement demonstrates the controversial surveillance practices are bad for American businesses. In the aftermath of the Snowden leaks, tech companies from Verizon to Facebook have had to defend their companies practices to angry customers in the U.S. and abroad concerned they are sharing personal data with the U.S. government. Companies from Microsoft to Apple have called on the government to make reforms.

Verizon Germany’s managing director Detlef Eppig released a statement to TechCrunch, “Verizon Germany is a German company and we comply with German law.”

The company outlines its “position on the inability of the U.S. government to access customer data stored outside the U.S.” on its policy blog. According to the post, Verizon did not receive any demands from the U.S. government for data stored in other countries. It goes on to say the U.S. can’t compel Verizon to produce data stored in centers outside the U.S., and if it tried to, the company could challenge that in court.

The current contract between Germany and Verizon will expire in 2015, the AP reported.

Germany has a history of leading European countries in the promotion of data privacy rights and online freedoms. Their strict policies have presented challenges for American companies like Facebook and Google.

The news comes on the heels of U.S. attempts to repair the blows the Snowden documents caused to its relationships with EU nations last year. On Wednesday the Obama administration pledged to pass legislation that would extend some of the personal privacy rights Americans have in U.S. courts to EU citizens.

When Merkel visited the U.S. in May, she told Obama it was too soon to return to “business as usual” in the wake of the NSA revelations. The announcement shows that’s not changing soon.

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