This kind of monitoring can not be tolerated. It is a violation of human rights and privacy. These people aren't criminals. They work and pay their dues to the government. What does the government need with any information they could possibly obtain from this? Were it to happen to me, I was disconnect myself from the Internet entirely.
Any government has the right to invade the privacy of all citizens of its country and less by using of trojan spyware or any another way. If what they want to find are spies from another countries who potentially can attack peace of the nation there are another methods of intelligence that could be used for that purpose.
It is true that Government needs to be sure about the intentions of its citizens. At the same time it is also very important to safeguard the privacy of its citizens. The methods the malware program would use would be to record the subject’s microphone for telephone or Skype calls, log the key strokes of a computer or mobile device, and access the cameras of any device infected.
Looking at this from a purely US point of view, of course the German government should not use spyware on its citizens. But, part of being a sovereign nation means being able to do as one wishes without the meddling of others. This is not an issue we as a country should even be getting involved in. It is not our business.