I have no idea who Privacy International is, but apparently they came out with a privacy ranking of several top websites a few days back. Basically, this "watchdog group" used a very subjective ranking methodology (if you can call it that) that ranks these companies on their privacy policies and practices. Google came out at the bottom of the list with the worst possible ranking (black on the color code). Matt Cutts is ticked because he feels like the report is completely off base. Danny Sullivan also gives a strong (and long) defense of Google on SearchEngineLand.com.
I agree with Matt, Danny, and the countless others who are challenging the validity of this report. They're not saying Google is perfect (far from it), but they make some very valid points that Google is not the worst when it comes to privacy.