In Berlin, the Foreign Ministry summoned the U.S. ambassador to complain, while Germany's defense minister said that Europe can't simply return to business as usual in trans-Atlantic ties following a string of reports that the U.S. was spying on its allies.
Merkel's chief of staff, Ronald Pofalla, said officials would make "unmistakably clear" to U.S. Ambassador John B. Emerson "that we expect all open questions to be answered."
The U.S. Embassy said it had no comment.
Defense Minister Thomas de Maiziere told ARD television the alleged surveillance would be "really bad" if confirmed. "The Americans are and remain our best friends, but this is absolutely not right," he said.
"I have reckoned for years with my cellphone being monitored, but I wasn't reckoning with the Americans," said de Maiziere, who was previously Merkel's chief of staff and Germany's interior minister.
"We can't simply return to business as usual," de Maiziere said when asked about possible effects on U.S.-German and U.S.-European relations.
This week, France demanded an explanation of a report the U.S. swept up millions of French phone records, and also summoned the American ambassador.
Germany, which has Europe's biggest economy, has been one of Washington's closest allies in Europe. The United States was West Germany's protector during the Cold War and the country is still home to thousands of U.S. troops.
A German parliamentary committee that oversees the country's intelligence service held a meeting Thursday to discuss the matter, which Pofalla attended.
Pofalla said that the government received information from news magazine Der Spiegel on the matter and then launched "extensive examinations" of the material. Der Spiegel has published material from National Security Agency leaker Edward Snowden, but didn't detail its sources on the cellphone story.
Recalling previous reports to the panel that U.S. authorities have said they didn't violate German interests, committee head Thomas Oppermann said that "we were apparently deceived by the American side." Pofalla said he had ordered a review of previous statements received from the NSA.
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Moulson reported from Berlin.