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The Ugliness of Privacy Notices
It is true that a competitive market allows me to choose between several search engines, but Google makes the false and deceptive claim that their service is free (by not posting its privacy policy up front), while all of its competitors disclose their actual prices. How can I possibly shop around for the best service if Google doesn't charge me until after I've consumed the product?
My premise is that the goal of privacy policies was to put consumers in a better position to protect privacy.
Richard sees the California law as a cudgel for tarnishing the reputation of a company he doesn't like. It's not incoherent, but I don't think it's what the law was for or an aid to privacy.
DB, you're closer to the point, but I think you miss the lesson we've learned: People don't read privacy policies. Accordingly, putting the policy on the homepage doesn't affect the consumer decision-making process. It just clutters the homepage, which Google rightly prides itself on keeping clean. (I agree that the privacy policy should be easy to find for those who care, and it is.)
There's an interesting broader point raised by your comment, DB, about notice generally. Every transaction, online or off, has privacy costs (to a greater or lesser extent, depending heavily on whether the medium of exchange is digital or not). Telling people about this in a specific notice is superfluous for all but the most ignorant.
I suspect that the Richard's comment reveals the point of this little dust-up: to take Google down a notch, not to promote consumer privacy.
I don't consider tarnishing Google's phony image to be the primary benefit of enforcing the law, it's just an amusing side-effect.
There's no dispute that Google has broken the law, is there? Just whether it should be enforced against the Cleanest Site on the Web?