The Spanish midfielder is being linked with a move to the English champions in the summer.
However, ex-Reds and Bayern star Ziege believes that Thiago does not fit with Jurgen Klopp's style of play.
"I have to say I love this player," Ziege told Caught Offside.
"He is a fantastic player but I'm not sure he fits into the Premier League and the Klopp style of playing.
"I think where he is, Bayern Munich, is a good place for him. Or maybe a Spanish team.
"I'm not 100 per cent sure [about him joining Liverpool], although he is a fantastic player so he will handle it somehow. I'm just not 100 per cent sure it's right for him."