‘Don’t be evil.” That’s the motto of Google, which was founded in 1997 and is now worth $129 billion (£72 billion), making it the fastest growing company in the history of the world. The mixture of unprecedented financial growth and squeaky-clean ethics has made Google the only company in the world which is perceived as simultaneously cool, successful and on the side of the good guys.

Or at least that was the case until last week, when Google announced that it was switching its search facilities in China to servers based inside the country, and that as part of that process it would be co- operating with Chinese government censorship of the internet.

Previously, Chinese users of Google had to access servers in America; the search results were then passed through Chinese government internet servers — “the great Firewall of China”— before getting back to the user; the Chinese government employs 30,000 policemen who work full-time monitoring the internet.

Until now, Chinese net users who were blocked from accessing a site knew that the information was there and was being kept from them by their own government. From now on it is Google which will be keeping data from them, in direct contradiction of its own declared mission “to organise the world’s information and make it universally accessible and useful”.

The reaction to Google’s move has been highly critical. The watchdog organisation Reporters Without Borders called it “a black day for freedom of expression in China”, adding that “Google’s statements about respecting online privacy are the height of hypocrisy in view of its strategy in China”. It seemed that the company’s real motto was something more along the lines of “don’t be evil unless the Chinese government asks you to and there’s serious money in it”.

Long-term Googlewatchers were not surprised: Google has been collaborating with Chinese censorship of its news service since September 2004. Google is also a part-owner of the biggest Chinese search engine, Baidu, which is slavishly compliant with government censorship. There was no possibility that Google was ever going to pass up the chance of making money in the world’s biggest potential market.

However, the news hit particularly hard because the company, having had something of a free ride in the mainstream media, had only just come under sharply increased scrutiny. Just the week before, the news had broken that Google was fighting a subpoena brought by the US Department of Justice.

The DoJ was demanding a list of every website address available on Google and every search term entered for June and July 2005 — a request later narrowed to a random list of 1m websites and all the URLs (uniform resource locators, the global addresses of documents and other resources on the web) available in a given week.

The government was looking to assess the prevalence on the internet of what it calls HTM — harmful to minor — not child pornography, but pornography that children can accidentally access. It turned out that AOL, Microsoft and Yahoo! had all already complied with similar requests. To many this seemed the long predicted privacy apocalypse. It isn’t, not quite, since the subpoena specifically omits information that would identify who is doing the searching. But it is an incredibly worrying sign, not least because it shows the way governments might come to use search engines as a form of privatised surveillance.

Google has an extraordinary amount of information about its users. It logs all the searches made on it and stores this information indefinitely. Because every computer has a unique IP (internet protocol) address, every visit to every website can be traced back to the computer making it — a fact which is well known in geek circles but remarkably under-publicised outside them. (Shi Tao, the Chinese journalist, was given 10 years in jail last April for “leaking state secrets” after Yahoo! in Hong Kong handed over information linking his IP address and his e-mail to the Chinese authorities.) Users of Google’s Gmail service, who are already having their e-mails scanned to place targeted ads, have given the company their identity, a full record of all their searches and copies of all their e-mails, stored indefinitely. Users of Google’s Toolbar are inadvertently giving the company a list of not just all their searches but also of every single website they visit. And, as the lawsuit makes clear, all this information is potentially vulnerable to subpoena.

So good on Google for fighting the subpoena even if — as geeks suspect — it did so to protect trade secrets. The news about the subpoena caused Google’s share price to drop 8.5% in one day. The company is now worth $20 billion less than it was a month ago.

This is the stock market’s way of saying that the more people think about their privacy, the worse it is for Google. Add the China story to the American subpoena and it seems that Google has travelled a long way from the sunlit super-optimistic Californian campus where it began.

Google is the only multi-billion-dollar company in the world that is also a spelling mistake. Back in 1997 its co-founders, Larry Page and Sergey Brin, were graduate computer science students at Stanford. They were working on an insanely cool new search engine, they wanted to incorporate it as a company and they needed to find a name. A fellow student suggested they use the name given to what is the largest number: google. They looked up the name on the internet, found that it wasn’t taken and registered their brand-new brand, Google.com. The next morning they found that the reason why the name hadn’t been taken was because it should be spelt googol — and that Googol.com had, of course, been bagged.