Cybersecurity, Google and the NSA

Yesterday’s broadcast of Fresh Air was an interesting one.  The topic was Cyberterrorism.  The guest was James Lewis, a senior fellow at the Center for Strategic and International Studies and the co-author of the report “Security Cyberspace in the 44th Presidency.”  It’s quite a sensationalistic term, cyberterrorism, and I wonder what the difference is between cyber crime and cyberterrorism.  For example, China’s attempt to hack GMail, why is that not CyberTerrorism?
Now Google is working with the NSA to investigate those attacks and that is raising concerns.  The ACLU is asking people to contact Google to ask them not to do so, citing concerns about the functions of the NSA, privacy and the rights of citizens.  The Electronic Privacy Information Center (EPIC) announced on February 4 that it had

filed a Freedom of Information Act request with the National Security Agency, seeking records regarding the relationship between Google and the NSA….The EPIC FOIA request also seeks NSA communications with Google regarding Google’s failure to encrypt Gmail and cloud computing services. In March 2009, EPIC filed a complaint with the Federal Trade Commission urging it to investigate the adequacy of Google’s cloud computing privacy and security safeguards. Today EPIC also filed a lawsuit against the National Security Agency and the National Security Council, seeking a key document governing national cybersecurity policy.
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I have to admit that the relationship bothers me as well.  But vulnerabilities in services as widely used and as important as Google’s do have implications for national security, and they they are the best at helping Google deal with them, then perhaps they should be consulted.  What are the alternatives?  What’s the balance between privacy and security?