It's not rumors, Germany has their own full-fledged NSA-equivalent (the BND) spying on the populace cooperating with the NSA as a Tier 2 nation.
The German government was not just complicit, they were actively pushing for wider surveillance on their own citizens. Likely this is part of the motivation for the rumblings about European-based Internet services: the BND would have more negotiating leverage and power if they could directly access e.g. Facebook servers rather than having to go through the NSA.
The German government was not just complicit, they were actively pushing for wider surveillance on their own citizens. Likely this is part of the motivation for the rumblings about European-based Internet services: the BND would have more negotiating leverage and power if they could directly access e.g. Facebook servers rather than having to go through the NSA.