This seems like an absurdly high standard if obeying the law and pushing for updated laws isn't enough.
However understandable Google's position may be, fighting the law is not an "absurdly high standard". Sometimes it's simply the right thing to do.
This "obey the law, obey the government" attitude is a post-9/11 thing we really need to get over.
I'm reluctant to see that as parallel to refusing to turn over evidence of a crime. For example, if a journalist had documents that are potentially incriminating of a third party, and a judge asked for them, I don't know the journalist would refuse.
At some point there's always people making decisions. The abstract soulless entity "Google" may not have any moral responsibilities, but Google's owners do.
Even if this is entirely true, it is quite possible that fighting the law more aggressively may be in their share holders best long-term interest. An excessive focus on the extremely short term has caused many businesses quite a lot of trouble over the last century. For a really interesting analysis of the decline of a machine-tool manufacturing company (the most thorough discussion of the issues I know of) see Max Holland's When the Machine Stopped, about the decline and collapse of Burgmaster, a mid-century "start-up" by an inventor.
I was talking about the prospect of them breaking the law.
This is true, but you're assuming that the shareholder's only interest is financial. I daresay that at least some of them bought those shares because they believe in the "do no evil" motto, and believe that Google can make the world better.
To this extent, doing the right thing despite monetary costs may be what the shareholders want.
I'm a shareholder. It's not much, but it does imply a tiny bit of ownership. And so, as a shareholder, I want Google to be totally righteous even at the risk of going bankrupt.
No, they just ran out of choices that didn't actually demand anything of themselves.
The law, in case of disputes, doesn't work that you just obey one rule. Different people interpret them differently and often multiple rules apply. Also, laws and their interpretations change over time.
Just because one branch of the government claims the law says you have to do X doesn't mean that's the only interpretation of the law or the only law that applies.
That's why a different branch of the government interprets laws than enforces them, at least in the U.S. When the executive branch tries to circumvent the judicial, you can bet they don't think the judicial branch would agree on their interpretation.