I've always thought that a company adopting an ambiguous, unprincipled, undefined motto such as "Do No Evil" was in for trouble. Didn't Google's founders understand, at the very least, that people have different definitions of "evil"? To some, just being a large successful company is a mark of Satan, and Google passed that definition long ago.
Google is also comprised of individuals, and as this story shows those individuals have personal opinions that will also offend some people's moral standards. Specifically, there's the blog entry by a Google employee that recommended that healthcare companies advertise on Google as a means of countering the effects of Moore's hack job, "Sicko." Now, I, personally, find that both an intelligent and a highly moral post, but many considered it to go against Google's motto.
And therein lies the rub. Go to Google's Web site, and their company philosophy (and the motto) is spelled out more clearly. But they haven't failed to milk the more general "Do No Evil" urban legend, and it's starting to cost them.