German government cancels contract with Verizon over U.S. spying allegations

Verizon's (NYSE: VZ) contract with the German government has been cancelled following revelations last year of U.S. government spying, according to multiple media reports.

After disclosures made by U.S. government contractor Edward Snowden, including allegations that the National Security Agency (NSA) eavesdropped on Germany Chancellor Angela Merkel's phone, the German government began a review of its internal communications and government networks.

Germany's Interior Ministry said that it would let its current Internet service contract with Verizon, which has been providing service to the German government's Berlin-Bonn network since 2010, expire in 2015.

Deutsche Telekom (DT) will take over responsibility of the services from incumbent telco Verizon when the contract expires. DT is already responsible for the most sensitive communications between ministries or between the government and German intelligence agencies. 

Detlef Eppig, head of Verizon's German unit Verizon Germany, said on Thursday in a Reuters article that "Verizon Germany is a German company and we comply with German law."

Verizon added that it did not receive any requests from the U.S. government to provide them with data from other countries and if it did attempt to acquire such data, it would challenge the matter in court.

While the contract won't expire until next year, this is a blow for Verizon, particularly as it weathers the storm of slow public sector spending trends. 

In June 2013, Verizon Business was forced to give its daily call detail records to the NSA, in an order issued shortly after the bombing at the Boston Marathon in April. Besides Verizon, AT&T (NYSE: T) and Sprint (NYSE: S) are also part of the NSA's phone and data collection efforts.

For more:
- Reuters has this article

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