He didn't say that to "justify Google's privacy policies". He said it specifically in response to a question on whether you can trust Google in the face of government investigation.
> "People are treating Google like their most trusted friend. Should they be?"
> "I think judgment matters. If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place. But if you really need that kind of privacy, the reality is that search engines, including Google, do retain this information for some time. And it’s important, for example, that we are all subject in the United States to the Patriot Act. It is possible that information could be made available to the authorities."
Which, in light of the the legal lengths the federal government will go to get their hands on every bit of data--let alone the illegal lengths they'll go--is a pretty important warning.
But we didn't talk about that, because the internet and the media operates on sound bites. It mattered what Eric Schmidt may or may not have approved of (that statement literally takes no position either way), not the important point he made immediately afterwards. Not a lot of PGP and OTR discussions on the internet that day, just knee-jerk "oh the irony!" contentless posts.
You're right, this was before the new Google privacy policies. But he did say that phrase in order to downplay Google's own responsibility in retaining search information. More importantly, propagating the idea that you should only care about privacy when it comes to things "that you don't want anyone to know" is irresponsible, and it's worrying that it comes from the single biggest handler of personal information in the world. Bruce Schneier said that a lot better than myself: https://www.schneier.com/blog/archives/2009/12/my_reaction_t...
About the new privacy policies, here's another interesting part from that same interview, which to my knowledge hasn't been transcribed anywhere:
But Eric Schmidt says protecting user privacy is Google's top priority.
- Where does all my search info go?
- Well first place our privacy policies are fully disclosed on our website and it's all written down very carefully. The most important thing we do is that after 18 months, the search information that you entered is so-called anonymized, it's literally gotten rid of and we can't go back and track it back to you.
Two years later Google would overhaul the privacy policy and get rid of most safeguards, including that "most important thing". Today, Google could retain your search data for any length of time or use it in unrelated products for any purpose they wish. So much for privacy being "Google's top priority"...
(To be clear, I'm not blaming Eric Schmidt since he was no longer CEO. I just want to highlight the striking fact that his whole defence would fall apart.)
The question itself wasn't about government investigation, Schmidt himself added that. If the context around the question was about that, you should include it.
The documentary explains the issues of government investigation right before that, but it's impossible to say whether it was an editing decision made after Schmidt chose to mention the government or whether the interviewer specifically asked about that.
"If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place."
The irony must be pretty painful.