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The Honolulu Advertiser
Posted on: Tuesday, January 24, 2006

Google reputation on the line

By Jim Hopkins
USA Today

SAN FRANCISCO Google, facing its biggest public relations battle yet, has more at stake than competitors as it fights a federal government demand for data on how millions of users search the Internet.

As the No. 1 online search company, Google has the highest profile, and a brand built on a "don't be evil" motto that it must defend as it expands further into search-related ventures.

"That is their motto and their ambition, and they need to be true to that," says Denise Garcia, an analyst who follows Google at W.R. Hambrecht.

Google's stance will likely burnish its image as a search engine industry leader that can be trusted to guard its users' data, Garcia says.

Investors expressed some initial concern over Google's situation. On Friday, the company's shares fell 8.5 percent, or $36.98, to $399.46, a day after published reports of its refusal to bow to a Justice Department subpoena. It was Google's biggest daily percentage decline since it went public in August 2004.

However, Google's shares rebounded yesterday, rising $28.04, or 7 percent, to $427.50. They have more than doubled in the past year.

The Justice Department asked a federal judge in San Jose on Wednesday for an order to force Google to turn over the records as part of the administration's efforts to revive an online pornography law.

The other major search providers Yahoo, Microsoft's MSN and Time Warner's America Online have cooperated with the government. Company representatives all said that they did not turn over data that identified individual users.

Google, MSN, AOL and Yahoo declined to say whether they had received other government subpoenas in the past year, company representatives said Friday.

Google co-founder Larry Page reiterated the company's opposition Friday in an interview with ABC News.

"Our company relies on having the trust of our users," Page said. "That's a very strong motivation for us. I think instead we should have laws that protect the privacy of data, for example, from government requests and other kinds of requests."

More than its competitors, Google has been dogged by privacy concerns.

Launched in 1998, Google now controls the world's biggest computer network and database a mountain of electronic information that includes every search by its millions of users.

"Privacy advocates have put a big red bull's eye on it," says Jeff Nolan, a venture capitalist.

In resisting the Justice Department's request, Google doesn't want to further rile privacy advocates or worry users, says search engine expert John Battelle.

Google's stance comes as it mounts defenses against the sort of government intrusion posed by the Justice Department.

It has been beefing up its Washington political operation with the addition of company lobbyists working with an outside lobbying firm, for example.