Merkel, who visits France on Wednesday, has been pushing for greater data protection in Europe following reports last year about mass surveillance in Germany and elsewhere by the US National Security Agency. Even Merkel's cell phone was reportedly monitored by American spies.
Merkel said in her weekly podcast that she disapproved of companies such as Google and Facebook basing their operations in countries with low levels of data protection while being active in countries such as Germany with high data protection.
"We'll talk with France about how we can maintain a high level of data protection," Merkel said.
"Above all, we'll talk about European providers that offer security for our citizens, so that one shouldn't have to send emails and other information across the Atlantic. Rather, one could build up a communication network inside Europe," Merkel said.
Germany has been pushing, so far in vain, for a 'no-spy' agreement with Washington.
Hollande's office confirmed that the governments had been discussing the matter and said Paris agreed with Berlin's proposals.
"Now that the German government is formed, it is important that we take up the initiative together," an official said.
Asked if Merkel’s idea clashed with Digital Agenda Commissioner Nellie Kroes's position that no government control should be imposed on the internet, her spokesperson Ryan Heath said he saw no contradiction.
He said that the EU executive supported Merkel’s call for better network security.
“These issues affect all Europeans and therefore require Europeans solutions”, Heath said. He added that the Commissioner had made proposals in the same direction, which include a European cloud space, a data protection reform package, and a revised telecom single market regulation.
“We look forward to the discussions on Wednesday and we do hope that they lead to an acceleration of those proposals we’ve already made in this field”, Heath said.
The spokesperson also said that Merkel did not propose “a European internet” distinct from the worldwide web, but was looking for an option in which Europeans could use an option in which their data would be stored inside the EU and would not leave Europe. He added however that more details were likely to become available after the discussions in Paris, which will also involve “leading industrials”.