Merkel, who learned in October her personal cellphone was tapped by the National Security Agency for more than a decade, said she planned to press French President Francois Holland to back a push for European Union alternatives to the current U.S.-dominated Internet infrastructure when she meets with him in Paris Wednesday.
"We will talk with France about how we can maintain a high level of data protection," Merkel said in her weekly podcast.
"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," she said.
The alternative she would prefer would be to "build up communications networks inside Europe," she said.
French government officials said Paris intended to "take up" the German initiative, Britain's Independent newspaper reported.
Hollande, who courted Silicon Valley companies last week in a U.S. tour, told President Obama when he was in Washington U.S.-French mutual trust had been "restored" after the spying scandal, which included NSA surveillance of millions of French phone calls, including those of government officials.
Former NSA contractor Edward Snowden, whose leaks of top-secret NSA documents revealed the spying on Merkel and other world leaders as part of the intelligence agency's global surveillance apparatus, told German state broadcaster ARD the creation of a European "cloud" that did not send electronic data to servers on U.S. soil would not protect Europe from U.S. espionage.
"The NSA goes where the data are," Snowden said. "If the NSA can pull text messages out of telecommunications networks in China, they can probably manage to get Facebook messages out of Germany."
In her podcast, Merkel attacked Facebook Inc. and Google Inc. for basing their European operations "where data protection is at its lowest" -- an indirect reference the Financial Times said was meant to be a swipe against Ireland, where both companies have their European headquarters.
"That's something that in the long run we can't endorse in Europe," Merkel said.
Her comments came as German news weekly Der Spiegel reported Sunday Germany's main domestic intelligence agency, the Federal Office for the Protection of the Constitution, planned a "massive" increase in counterespionage measures against the United States and other "partner countries," including Britain, also implicated in German surveillance.
Merkel's office, as well as Germany's Interior Ministry and Foreign Ministry, would have to give a green light to the enhanced counterintelligence measures, which would also include getting more information about intelligence agents accredited as U.S. diplomats and about the technology used within the U.S. Embassy and other allied countries' outposts, the magazine said.
Germany's Military Counterintelligence Service may also step up countersurveillance of U.S. and British spying activities, Der Spiegel said, noting such a move would mark a sharp break from Germany's traditional counterespionage focus on countries such as China, North Korea and Russia.