Germany doesn't like the look in Verizon's eyes.
Verizon is an Internet service provider for multiple German government divisions, though not German intelligence agencies. Still, the government is ending its contract with the Internet provider because of concerns that Verizon is giving the NSA access to German data.
Germany's concern is understandable given revelations from Edward Snowden last year that the United States had surveilled Chancellor Angela Merkel and other German citizens. German Interior Ministry spokesperson Tobias Plate told the Associated Press, “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.”
Verizon's “Verizon Germany” division denies this, though, and maintains that it does not comply with NSA data requests or those from any other U.S. intelligence agency. The company points to a Verizon blog post that explains that the U.S. government doesn't have access to data that is stored on servers outside the United States. Detlef Eppig the managing director of Verizon Germany told the AP in a statement, “Verizon Germany is a German company, and we comply with German law.”
Furthermore, the Washington Post points out that Der Spiegel published a report just last week about close ties and cooperation between the NSA and German intelligence agencies, so maybe Verizon isn't really the problem here. From the German government's perspective, though, it probably can't hurt to play it safe.