The German government has cancelled a contract with Verizon over concern that US firms may be giving data to US authorities.
Verizon has provided internet services to a number of German government departments and the current contract was due to run out in 2015.
The firm did not comment on the move.
There was anger in Germany over allegations that a US agency bugged Chancellor Angela Merkel's phone.
Earlier this month Germany announced an investigation into those allegations which were made by a former contractor of the US National Security Agency (NSA), Edward Snowden.
There is no suggestion that Verizon was involved, but the controversy has put pressure on US technology firms doing business in Germany.
High level security
German Interior Ministry spokesman Tobias Plate said: "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".
"Furthermore, the ties revealed between foreign intelligence agencies and firms in the wake of the US National Security Agency affair, show that the German government needs a very high level of security for its critical networks," he said.
Verizon is the second biggest US telecoms company after AT&T.