The European Union's Article 29 Working Party has asked Google to justify its policy of keeping information on individuals' internet searches for up to two years, according to EU Spokesman Pietro Petrucci.
Google's new policy is to anonymize its server logs after 18--24 months so searches can't be identified with individual users.
The EU itself requires that customer data must be retained "for periods of not less than six months and not more than two years from the date of the communication." Only "traffic and location data," not the "content of electronic communications, including information consulted using an electronic communications network" is required to be retained.
Google is attempting to position itself on the right side of legislation pending in Congress which would allow the Attorney General to issue regulations governing the retention of records by ISPs, as discussed here and here.
See: "EU probes Google grip on data," Financial Times, May 24, 2007
See: "EU probes Google over privacy concerns," USA TODAY, May 24, 2007.
See: "DIRECTIVE 2006/24/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 15 March 2006 on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC.