Google Changes their Security Practices

Google To Anonymize.

Google will begin removing one fourth to half of each IP address after 18 months to 2 years to anonymize user data.

The government has been asking ISPs to hold data for a year or more. Read more about it here and here.

My question is how long Google was actually keeping data before and is this new policy really a privacy enhancing move or is Google actually capitulating to government requests to keep more data for longer?

For more info on Google's announcement, read about it in Wired, Google Blog, Boing Boing, the New York Times, and CNET.