Google's reputation at stake

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.

But in the short run, investors are worried. Friday, stock in the company plummeted 8.5%, or $36.98 a share, 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.

Garcia said the subpoena fight was the biggest factor in the stock's decline. It also was driven by a weak revenue forecast earlier in the week by competitor Yahoo. That spooked investors anti-cipating Google's fourth-quarter results, due out Jan. 31.

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.

Continued at USAToday