"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. 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 and it is possible that all that information could be made available to the authorities."
In this context, and not in the pull-quote part everyone loves, I think his meaning is quite clear. Your expectation of privacy is flawed because of the legal system you (probably) operate within. I'm trying to imagine what you want him to say: "We think privacy is important so we ignore federal laws for geek cred WHOOO". Does that seem like a prudent thing to say as the CEO of a major American firm?