Look out GOOGLE--Bad Privacy Report

Jun 9, 5:26 PM (ET)

By MICHAEL LIEDTKE

SAN FRANCISCO (AP) - Google Inc. (GOOG)'s privacy practices are the worst among the Internet's top destinations, according to a watchdog group seeking to intensify the recent focus on how the online search leader handles personal information about its users.

In a report released Saturday, London-based Privacy International assigned Google its lowest possible grade. The category is reserved for companies with "comprehensive consumer surveillance and entrenched hostility to privacy."

None of the 22 other surveyed companies - a group that included Yahoo Inc. (YHOO), Microsoft Corp. (MSFT) and AOL - sunk to that level, according to Privacy International.

While a number of other Internet companies have troubling policies, none comes as close to Google to "achieving status as an endemic threat to privacy," Privacy International said in an explanation of its findings.

In a statement from one of its lawyers, Google said it aggressively protects its users' privacy and stands behind its track record. In its most conspicuous defense of user privacy, Google last year successfully fought a U.S. Justice Department subpoena demanding to review millions of search requests.

"We are disappointed with Privacy International's report, which is based on numerous inaccuracies and misunderstandings about our services," said Nicole Wong, Google's deputy general counsel.

"It's a shame that Privacy International decided to publish its report before we had an opportunity to discuss our privacy practices with them."

Privacy International contacted Google earlier this month, but didn't receive a response, said Simon Davies, the group's director.

The scathing report is just the latest strike aimed at Google's privacy practices.

An independent European panel recently opened an inquiry into whether Google's policies abide by Europe's privacy rules.

Meanwhile, three consumer groups in the United States are pressuring the nation's regulators to make Google change some of its privacy policies as part of its proposed $3.1 billion acquisition of online ad service DoubleClick Inc., which also tracks Web surfers' behavior.

The U.S. Federal Trade Commission is looking into antitrust concerns raised by the DoubleClick deal, but has not indicated if privacy issues will be part of the inquiry.

Hoping to placate its critics, Google has pledged to begin erasing the information about users' search requests within 18 to 24 months.

The company says its stockpiles data to help its search engine better understand its users so it can deliver more relevant results and advertisements.

As Google becomes more knowledgeable about the people relying on its search engine and other free services, management hopes to develop more tools that recommend activities and other pursuits that might appeal to individual users.

Privacy International is particularly troubled by Google's ability to match data gathered by its search engine with information collected from other services such as e-mail, instant messaging and maps.

"Under the microscope, it turns out that Google is doing much more with our data than we ever imagined," Davies said.

Founded in 1990, Privacy International said it reached its preliminary findings after spending the past six months reviewing Internet privacy practices with the help of about 30 professors, mostly in the United States and United Kingdom. The group plans to update the report in September.

Seven of the Internet companies and Web sites included in Privacy International's analysis received the second lowest grade of "substantial and comprehensive privacy threats." This group included: Time Warner Inc. (TWX)'s AOL, Apple Inc. (AAPL), Facebook.com, Hi5.com, Reunion.com, Microsoft's Windows Live Space and Yahoo.

None of the companies or sites received Privacy International's top grade, but five rated as "generally privacy-aware." They were: BBC, eBay Inc. (EBAY), Last.fm, LiveJournal.com, and Wikipedia.com.