See, this is what happens when you're too sensitive for your own good. People's reaction has been far too simplistic to this. Do people really think, in this day and age that their emails and searches are guaranteed to stay private? How much of naive fool do you have to be?

Mr Schmidt is completely correct. If you have something to hide, you should first consider why you have to hide it. And when you feel you should hide it, you shouldn't be using internet search engines or cloud services to do it because they offer no guarantee of your privacy. Not because the service itself is grepping your data looking for blackmail material, but because the government requires access to their data in certain instances. This is as true of Microsoft as it is on google as it is of joe-blow cloud-based y-combinator funded service.

If you're doing something you don't want to government finding out about, don't do it on the internet without major safeguards in place. period. End of story.