The head of the European Union group preparing a report on data privacy said yesterday IP addresses should be regarded as personal information, at a European Parliament hearing on online data protection, AP reports.

The data privacy group’s report will identify companies’ compliance with EU privacy laws. Judging by past EU behavior, a finding of noncompliance could affect firms’ status or result in hefty fines.

This is a blow to internet giant Google, which stores the IP addresses of its search engine users in order to confirm to advertisers that people are actually using the services and seeing the ads. The firm also says it collects IP addresses in order to improve search results by tailoring them to the user’s geographic location. Google strips out the last two numbers of the address, which the firm says sufficiently protects users’ privacy.

A representative of the Electronic Privacy Information Center said that Google’s claim is "absurd," the AP story reported.

Microsoft will not be affected by this decision, as its search engine does not collect IP addresses.

The statement by Germany’s data protection commissioner, Peter Scharr, is good news for computer users.

Dave Kopel, research director for the Independence Institute, agrees:

My view is that the EU is right on this one. An absolutely strict libertarian view would say that the government shouldn’t interfere. I try to take a "practical libertarian" view, in which we look at freedom (which includes privacy) holistically, and recognize that in a practical sense, big businesses can sometimes thwart freedom.

And given Google’s ready cooperation with the Chinese dictatorship, it hardly seems unlikely that Google would refuse to share its databases with governments, even without a warrant, under the right circumstances.

So I say "good for the EU."