Don't be dense, Google. What they're telling you is that the right people need to be paid-off or you're going to have more and more problems like this.
Funny thing is that Google is quite capable of opposing a country like Italy. They could simply cut all the traffic - search, documents, emails, g.apps, everything. There are many people depending on G. for work every single day. It's just not a sensible thing to do, financially. But if Italian prosecutors start suing employees of google.it for example - who knows? I would risk saying that Italy is less valuable and more annoying to Google right now, than China ever was...
Yeah, I really hope google comes out throwing some strong punches at Italy after this. The consequences of this ruling will have enormous chilling effects on any social media company operating in Italy. If google was able, eventually, to pass on China as a market based on standing up for its principles then passing on Italy as a market should be a slam dunk.
As long as they go through all the proper channels first. Don't want anyone complaining that they just wanted a press day. Unfortunately, this may take sometime. However, I think it'll be worth it.
I think given this ruling there is a very strong case for Google to block access from Italy to any of its sites that could run afoul of Italian privacy law. That would include blogger, youtube, picasaweb, google docs, google groups, wave, buzz, and possibly even gmail.
P.S. Consider how widely the net from Italy's privacy code reaches. Not just sites to like youtube, vimeo, break, or even flickr, but to just about any site that allows users to post their own content, including comments. By my reading if I were to post the home address of some Italian citizen in this very comment that would be sufficient to make it possible for Paul Graham to be convicted of breach of the privacy law in Italy.
By such criteria the fraction of, say, the top 1,000 most popular web sites that could legally operate in Italy currently without being vulnerable to a legal problem of that sort is probably fairly small.
Looking at Alexa's top sites I see the following sites within just the top 40 that can't operate in Italy without risk of a prosecution of this sort: facebook, youtube, wikipedia, blogger, twitter, myspace, wordpress, amazon, ebay, linkedin, livejasmin, rapidshare, flickr, craigslist (most of the remaining sites are search engines).
Don't be dense, Google. What they're telling you is that the right people need to be paid-off or you're going to have more and more problems like this.