The most interesting bit of the interview is at the beginning:
Schmidt: We keep the searches that you do for roughly a year/year and a half, and then we forget them.
Question: You say that, but can somebody come to you and say that we need information about Kathleen Parker.
Schmidt: Under a federal court order, properly delivered to us, we might be forced do that, but otherwise no.
Question: Does that happen very often?
Schmidt: Very rarely and if its not formally delivered, then we'll fight it.
Question: You say you keep stuff for a year/year and a half. Who decides?
Schmidt: Well, in fact, the European Government passed a set of laws that require us to keep it for a certain amount, and the reason is that the public safety sometimes wants to be able to look at that information.
Somehow in just a few sentences, Schmidt manages to misrepresent the facts several times (the question of if Schmidt is merely misinformed, or actively lying is left as an exercise for the reader).
First, on the subject of retention, it is completely false to say that after a year/year and a half, Google "forgets" searches.
Google's actual data retention policy is that after 9 months, the company deletes the last octet of users' IP addresses from its search logs, and then modifies the cookie in the logs with a one-way cryptographic hash after 18 months.
The company never deletes or "forgets" users' searches. It merely deletes a little bit of data that associates the searches to known Google users.
For those of you who may be inclined to give Schmidt the benefit of the doubt, regarding the difference between "forgetting" searches, and deleting a couple bits of an IP address in a log, remember that Schmidt has a PhD in computer science.
Google searches and the EU data retention directive
In May of 2007, Google's Global Privacy Counsel claimed that the European Data Retention Directive might apply to search engines.
Google may be subject to the EU Data Retention Directive, which was passed last year, in the wake of the Madrid and London terrorist bombings, to help law enforcement in the investigation and prosecution of "serious crime". The Directive requires all EU Member States to pass data retention laws by 2009 with retention for periods between 6 and 24 months. Since these laws do not yet exist, and are only now being proposed and debated, it is too early to know the final retention time periods, the jurisdictional impact, and the scope of applicability. It's therefore too early to state whether such laws would apply to particular Google services, and if so, which ones. In the U.S., the Department of Justice and others have similarly called for 24-month data retention laws.
One week later, the European Article 29 working party wrote a letter to Google, informing the company that:
As you are aware, server logs are information that can be linked to an identified or identifiable natural person and can, therefore, be considered personal data in the meaning of Data Protection Directive 95/46/EC. For that reason their collection and storage must respect data protection rules.
A month later, Google's Global Privacy Counsel replied to the Working Party:
Because Google may be subject to the requirements of the [Retention] Directive in some Member States, under the principle of legality, we have no choice but to be prepared to retain log server data for up to 24 months
Soon after, the European Commission's Data Protection Unit issued a statement to the media, stating that:
The Data Retention Directive applies only to providers of publicly available electronic communications services or of public communication networks and not to search engine systems . . . Accordingly, Google is not subject to this Directive as far as it concerns the search engine part of its applications and has no obligations thereof
Speaking of Google's claims, Ryan Singel of Wired News wrote that:
"It's a convincing argument, but it’s a misleading one. . . [Google's Global Privacy Counsel] Fleischer has been making this argument for months now, and even Threat Level bought it the first go-round. But let’s reiterate: There is no United States or E.U. law that requires Google to keep detailed logs of what individuals search for and click on at Google’s search engine. It’s simply dishonest to continually imply otherwise in order to hide the real political and monetary reasons that Google chooses to hang onto this data.
Professor Michael Zimmer, an expert on search engine privacy issues similarly debunked Google's false claims.
Finally, in 2008, the Article 29 Working Party issued an opinion on data retention issues related to search engines, which noted that:
Consequently, any reference to the Data Retention Directive in connection with the storage of server logs generated through the offering of a search engine service is not justified . . . the Working Party does not see a basis for a retention period beyond 6 months. However, the retention of personal data and the corresponding retention period must always be justified (with concrete and relevant arguments) and reduced to a minimum.
As this lengthy summary should have made clear, Eric Schmidt's statements that the company has to retain search data because of EU law are simply bogus.