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 U.S. 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."
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.
Government snooping is a particularly sensitive subject in Germany due to the heavy surveillance of citizens practised in communist East Germany and under Hitler, and there was widespread outrage at the revelations of NSA surveillance by former NSA contractor Edward Snowden.
"We've got to do more for data protection in Europe, there's no doubt about it," Merkel said on Saturday.
Germany has been pushing, so far in vain, for a 'no-spy' agreement with Washington.
Merkel she plans to discuss closer cooperation on climate protection with Hollande ahead of a global climate conference in France next year, as well as security policies, in particular with respect to Africa.
© Thomson Reuters 2014
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