German Government Ends Contract With Verizon Over U.S. Spying Concerns


The German government this week said it's ending a long-running contract with Verizon Communications over concerns that the U.S. telecom giant is facilitating NSA eavesdropping on German communications.

The move, announced Thursday by Germany's Interior Ministry, makes Verizon the latest in a string of U.S. technology companies whose businesses overseas have been hampered by last year's NSA revelations.  

According to a report from the Associated Press, Germany had already been reviewing its contract with Verizon when reports of the U.S. government specifically targeting German Chancellor Angela Merkel in its spying efforts pushed officials to drop the contract completely. The reports included leaked information from former NSA contractor Edward Snowden.  

[Related: Microsoft CEO Nadella Calls For U.S. Government NSA Surveillance Reform]

"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 Verizon contract, which has been in place since 2010, will end in 2015. New York-based Verizon had been providing services to a number of different German government agencies, none of which were focused on security, Plate said.

A Verizon Germany spokesperson responded to CRN's request for comment, stating that Verizon has previously "outlined our position on the inability of the U.S. Government to access customer data stored outside the U.S."

The spokesperson pointed to a recent Verizon blog post, stating: "the U.S. government cannot compel us to produce our customers’ data stored in data centers outside the U.S., and if it attempts to do so, we would challenge that attempt in court."

Vince Bradley, CEO of WTG, a Malibu, Calif.-based master agent and Verizon partner, said he is definitely seeing "signs of backlash from the Snowden incident." For starters, he said, there seems to be an increased number of customers looking to do business with carriers outside of the U.S.  

"There has been an increase in the number of international connectivity services quotes and RFP requests. The increase does not seem to just be organic growth," Bradley said. "Heightened security measures from the proliferation of cloud services can account for some of the increase, but this is approaching hockey-stick-type growth."

What's more, Bradley said, WTG is seeing more customer interest than ever in network security.

"Agent and VAR partners have shown signs of their customers looking for truly private networks," he said.

Verizon is one of several U.S. technology giants whose business abroad is being impacted by U.S. surveillance efforts overseas. Networking leader Cisco Systems, for one, has for the past two quarters attributed sluggish sales in China to heightened customer concerns over U.S. spying.

Cisco CEO John Chambers in May wrote a letter to President Obama, asking the U.S. to curb NSA surveillance. In the letter, Chambers argued that U.S. surveillance initiatives were damaging customers' trust in U.S. technology companies.  It was a point Chambers reiterated at the Cisco Live event in May.

"You've got to have a consistency of trust from the customers of the global supply chain," Chambers told reporters at the event.

Chambers' letter to the president came after the book No Place To Hide by Glenn Greenwald documented that the NSA had intercepted Cisco networking gear to install back doors for surveillance purposes. 

Executives from other major U.S. technology companies have voiced similar concerns. Earlier this month, Microsoft CEO Satya Nadella said U.S. government surveillance "reform" is necessary for global technology companies like Microsoft, Intel and Hewlett-Packard to "thrive in a global world."

PUBLISHED JUNE 27, 2014