I have some questions about Google’s reluctance to turn over user search data to the government. (For background on this story, see here.)

1. Why does Google gather this data to begin with? Wouldn’t the best way to protect user privacy be not to save this information in the first place? Why does Google need to know the identities of those who use the Google product?

2. Does Google release the information it collects to private third parties such as advertisers? If so, why the public-private distinction? Aren’t the same privacy interests implicated in both the private and public contexts? Why not ask the users themselves when they contract with search engines about the circumstances under which their data may be disclosed to third parties? In the early days of the Web, I published a paper, “Regulating Cyberactivity Disclosures: A Contractarian Approach,” 1996 University of Chicago Legal Forum 639, arguing that disclosure of a user’s “cyberactivities” to private third parties should be permitted as a default matter, so long as users have the affirmative right to opt for non-disclosure. Additional “public disclosure” language could easily be added to such opt out clauses.

3. If Google and other search engines such as Yahoo continue to collect user data, then shouldn’t there be a market opportunity for a search engine to break away from the pack and offer users the guarantee of privacy by simply not collecting user data to begin with? If this were to happen, it would be interesting to see which data collection procedure will end up becoming the norm. If enough users vote with their keystrokes in favor a “no collection” regime, one could imagine all the search engines feeling some pressure to adopt such a policy. But it’s equally plausible to think that many users will not care very much one way or the other, in which case users who are idiosyncratically private will have the “no collection” option but the majority of other users will stay with search engines that continue to collect search data.

The government subpoenas Google’s records, and also Yahoo!’s and Microsoft’s. MSFT and YHOO cave: Their stocks are down a little over and a little under 2%, respectively. Google resists. Its stock drops almost 9%. And yet a headline for an article by MSNBC’s chief economics correspondent–with the relevant stock prices immediately alongside–notes, “Google stand could be good for business.” Maybe he’s talking about Microsoft’s business?

The article quotes Dan Solove who has thoughts about the matter here, here and here. Solove and others view Google’s resistance as primarily a matter of principle, but I bet Google is quick to claim that it is (or at least “will be eventually. Really. We promise”) good for the bottom line. And perhaps here principle and profit coincide: That principle in this case seems to require resisting government interference in markets is a good indication that this might be true. But what if the two remain divergent?

Think about how Google’s actions square with one or more of these claims, Tyler Cowen’s attempted distillation of Milton Friedman’s thoughts on Corporate Social Responsibility:

1. Profit maximization is the best rule available, even though it fails society in particular instances (in that case, isn’t there some slightly more convoluted rule that can cover at least some of these situations and modify the outcomes? If only “very simple” rules are allowed, why?)

2. Businesses have no responsibility to behave in an act utilitarian fashion. Rules are rules, and we should follow them, come what may.

3. Following the doctrine of fiduciary responsibility — in this case to shareholders — is the greatest social good in these situations. It outweighs potential act utilitarian considerations pointing in other directions.

4. Force and fraud aside, profit maximization always coincides with the social good, at least in the absence of bad government interventions.

5. It is a public choice argument. The claim is a noble lie, for otherwise business will be regulated by government in a counterproductive manner.

6. So much anti-corporate nonsense has been written, so we need to shock people with an extreme claim in the opposite direction.

Defenders of Google’s actions on principle will point to the caveat in #4 and will deny especially #2 and #3.

I would like to rest my defense of profit maximization on #4, but as a descriptive matter, I think the exception is in serious danger of subsuming the rule. I suppose that leaves me with #3, which looks to me like a slightly weaker version of #4. (And Steve Bainbridge has mounted a compelling justification of #1 and #2).

Either way, I’ve said it before and I’ll say it again: Google does not have a duty here to saddle its shareholders with the cost of saving the world from itself. Although if I knew its leaders believed in any of the claims above, I’d give them the benefit of the doubt.

Via the WSJblog, I see that Google and the government are tangling again over the government’s effort to obtain search records (this time relating to porn-viewing-by-children enforcement efforts) (I guess that should read anti-porn-viewing-by-children enforcement efforts). It reminds me of a post of Dan’s on Concurring Opinions from a while back that I wanted to comment on, but, well, I didn’t have a blog then. I do now.

In that post, commenting on a NYT article suggesting that Google curtail certain information retention practices, Dan contends that

No matter what Google’s privacy policy says, the fact that it maintains information about people’s search activity enables the government to gather that data, often with a mere subpoena, which provides virtually no protection to privacy — and sometimes without even a subpoena. (emphasis added)

I find it interesting that the “blame” for privacy incursions by the government is being laid at Google’s feet. Google isn’t doing the . . . incursioning, and we wouldn’t have to saddle Google with any costs of protection (perhaps even lessening functionality) if we just nipped the problem in the bud. Importantly, the implication here is that government should not have access to the information in question–a decision that sounds inherently political to me. I’m just a little surprised to hear anyone (other than me) saying that corporations should take it upon themselves to “fix” government policy by, in effect, destroying records.

But at the same time, it makes some sense to look to Google to ameliorate these costs. Google is, after all, responsive to market forces, and (once in a while) I’m sure markets respond to consumer preferences more quickly and effectively than politicians do. And if Google perceives that offering more protection for its customers can be more cheaply done by restraining the government than by curtailing its own practices, then Dan’s suggestion that Google take the lead in lobbying for greater legislative protections of personal information may come to pass. Of course we’re still left with the problem of Google and not the politicians bearing the cost of their folly (if it is folly).

UPDATE:

So it turns out that although it may be a moral victory (for what precise vision of morality I don’t know), it surely isn’t looking like a financial one: Google’s stock plummets following news that it intends to fight the government’s subpoenas of its records. Now, does the drop in value reflect a recognition by shareholders that the “problem” is not, in fact, worth what Google will be paying to fix it (because perhaps it isn’t perceived as much of a problem outside the blawgosphere)? Or is it a reflection that the entire business model is imperiled, whether Google fights or not?