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Privacy laws trip up Google's expansion in Europe

Search giant is getting caught in a web of privacy laws that threaten its growth and the positive image it has cultivated. (From The New York Times)

When Google began hiring in Zurich, Switzerland, for its new engineering center in 2004, local officials welcomed the company with open arms. Google's arrival is still bearing fruit for Zurich: 450 people, 300 of them engineers, work in Google's seven-story complex in a converted brewery on the outskirts of the placid mountain metropolis.

But almost five years into its expansion into Europe--where it has a headquarters in Dublin, large offices in Zurich and London, and smaller centers in countries such as Denmark, Russia, and Poland--Google is getting caught in a web of privacy laws that threaten its growth and the positive image it has cultivated as a company dedicated to doing good.

In Switzerland, data protection officials are quietly pressing Google to scrap its plans to introduce Street View, a mapping service that provides a vivid, 360-degree, ground-level photographic panorama from any address, which would violate strict Swiss privacy laws that prohibit the unauthorized use of personal images or property.

In Germany, where Street View is also not available, simply taking photographs for the service violates privacy laws.

"The privacy issue will likely become increasingly important for Google, as it continues to offer new services in Europe," said Dirk Lewandowski, a professor of information sciences at the University of Applied Sciences in Hamburg. "For the moment, most consumers are not aware that their data is being used by Google in some fashion. But I think as people become aware of this, there could be protests that Google will have to address."

The conflict does not end with Street View, which so far in Europe depicts only major cities in France, Spain, and Italy.

Data protection advisers to the European Commission in Brussels are questioning Google over how long the company retains user logs--the files containing an individual's queries typed into Google search fields. A panel of regulators wants Google, as well as Yahoo and Microsoft, to purge the records after six months.

Google says it needs the data for nine months to hone its search engine to reflect the constant changes in contextual meaning caused by news and events. Before October, Google retained the records in the European Union for 18 months. Yahoo keeps records for 13 months, and MSN, Microsoft's search service, for 18 months. European officials are trying to persuade Google and the others to comply, but they have not ruled out asking the commission to intervene.

Nelson Mattos, a vice president responsible for Google's 12 engineering centers in Europe, the Middle East, and Africa, said he was confident that the company would reach a compromise with the authorities. In an interview in Zurich, Mattos said Street View would be added in Switzerland and Germany "at some point." But he declined to say when that might be.

"Google is committed to making sure the data of its users is well protected and not misused," he said. "Europe has a history of innovation. Where it has not always done as good a job, in my opinion, is in follow-on innovation, in commercializing the innovation. If you restrict too much how a company like Google can innovate, that will restrict the follow-on benefits in Europe."

To enhance its profile among European decision makers, Google has bolstered its presence in government centers around Europe. The company now has enough employees to fill three floors of an office building in downtown Brussels. In five years, Google has hired about 3,500 people in Europe for its regional headquarters in Dublin, its larger offices in London and Zurich, and at smaller centers in Krakow, Poland; St. Petersburg, Russia; and Aarhus, Denmark.

Many of the company's most recent innovations, like elements of its new Chrome Web browser, an analytic tool called Trends and a mass transportation trip planner called Transit, have been conceived or improved in Europe.

The engineering center in Zurich helped speed up the functioning of Video ID, an automated video search service that allows video and music copyright owners to sweep YouTube, the largest video-sharing site, to detect illegal uploads. Google bought YouTube in October 2006.

Introduced a year ago, Video ID is being used by 300 companies, including Lions Gate Entertainment, Sony Music Entertainment, and the Italian broadcaster RAI. In 90 percent of cases, says Patrick Walker, director of partnerships at YouTube in London, companies choose not to block the illegal footage; instead, they run advertisements next to the homegrown uploads, splitting the revenue with YouTube.

"It has basically allowed all types of rights holders for the first time to protect their content on the Web," Walker said, "and in most cases, has opened up a whole new way for companies to make money off of their inventories."

Some of Google's technical advances are starting to impress some European policy makers. At a conference in Brussels in October, the European commissioner for Internet issues, Viviane Reding, said Video ID "ensures that rights owners regain sovereignty over the exploitation of their work."

In Switzerland, Google has so far agreed to block Street View, said Bruno Baeriswyl, the director of Privatim, the privacy agency for the Canton of Zurich.

The data protection agency Edob is also in talks with Google because a Swiss law that took effect January 1 requires all companies in Switzerland that maintain databases on individuals to disclose to the agency how they manage the information.

"We have been in contact with Google about different topics," said Eliane Schmid, a spokesman for the agency, called the Eidgenossicher Datenschutz und Offentlichkeitsbeauftragter. "These are initial contacts, and as such, not of an official nature. Therefore, you will understand that any details remain confidential for the moment."

In Germany, opposition to Street View is more visible. In Kiel, a town on the Baltic Sea coast, officials are threatening Google with fines and are distributing stickers for homeowners to display advising Google's photographers to take no pictures of their property for Street View.

"What Google is doing with Street View violates German law," said Marit Hansen, deputy director of the Unabhangiges Landeszentrum fur Datenschutz in Schleswig-Holstein, the state in which Kiel is located. "It's not enough that Google's Street View is not yet available in Germany. The simple photographing is in itself a violation."

European consumers appear to be less worried than some regulators about the potential loss of privacy. ComScore, a research firm in Reston, Va., found that 8 in 10 Europeans used Google for online search queries.

"The data protection agencies tend to be extreme," said Peter Heinzmann, chief executive of CN Lab, a Swiss company that makes software for Web cameras. "But most people are voluntarily giving information to Google because they think the benefits outweigh the risks. So why restrict innovation?"