So there’s a pretty big battle brewing in San Jose that looks like it has the potential to drive major change. Google’s battle with the government over privacy laws is something to pay attention to for a number of reasons.  Last week alone, over $20 billion in shareholder value evaporated with a 14% decline of their stock price as the market mulled the possible fallout from Google’s rebuff of a Justice Department subpoena seeking a list of its users’ search requests for a one-week period, according to this article in the  Associated Press The government is looking for the information to support its efforts to revive the 1998 Child Online Protection Act, which the Supreme Court blocked from taking effect two years ago.   U.S. Attorney General Alberto Gonzales seems intent on getting his hands on this information and other major corporations, Yahoo, AOL and Microsoft included (fair disclosure: I do PR for Microsoft but that’s besides the point for the sake of this discussion) have accommodated the request. 

How hard of a line is Google going to hold if the federal government really presses the issue?  How far might that stand depress the value of their high flying stock and how much will that decline impact the ambitions associated with this Wall Street wunderkind.  In August when this Fast Company story was written exploring what might be on the horizon for Google, the stock was trading at $300, already 3 times it’s opening price.  It hit over $475 earlier this month.  I don’t know the answers nor am I prepared to hazard a guess, but the fact that a principle, even one as fundamental to the success of the Internet as the privacy of user information, may be the undoing of Google is certainly intriguing. In an era where identity theft runs rampant, spam fills your inbox (though that is getting better) and spyware was literally interrupting a presentation that an associate and I were making to a group of Microsoft partners last week (yes, I recognize the irony in that particular set of events), it is rather fascinating that a corporation with the reach and promise of Google may well bet its business on a principle.

If everything were to proceed down an absolute worst case scenario, it could have a huge impact in technology circles and the economy at large.  It could also be resolved by next week and a total non-issue altogether.  I hope that this doesn’t become an issue between the Attorney General’s office and Google that literally, topples a giant as I, and many observers, am eager to see what they’re going to do next.

–Eric Kushner