For what it's worth
H. L. Mencken has been quoted as saying, "For every complex problem there a solution that is simple, neat, and wrong."
Privatization of academic research creates enormous issues with respect to public confidence in the basic integrity of science in the US. Intense competition for research dollars has, in my personal opinion, significantly degraded the basic quality and integrity of science.
Basic science is essential to the continued advance of human knowledge and quality of life. Private companies, even Google, have the right to contract with academic institutions, and such private funding has become an important source of funding. But let the parties involved be honest about it. Companies are funding private academic research for their own benefit and profit. Universities accepting it do so in large part for the aggrandizement of their institutions and the personal benefit of their faculty members.
The pretext that they are doing otherwise is ludicrous and offensive. Of course, Google doesn't want Stanford spending its money doing research on privacy. Let them say so in the terms and conditions of the grant.
The devil, as always, is in the details. Companies contract with academic institutions for research, to avail themselves of a corporate capability that has taken years to build. In the case of publicly-funded Universities, the cost of building that capability has been heavily funded by the citizens.
University policies pay lip service to their responsibility to ensure that the general public receives the benefits of its academic research. But, the notion that simply paying for a piece of research and allowing the university to publish a few academic papers is an adequate quid pro quo for acquiring exclusive rights to use of the resulting intellectual property is nonsense. It simply does not adequately represent the equities involved.
It's a complex problem, and simple, neat answers like the one offered by the CATO Institute are wrong.
(I had planned to conclude this post with a scathing critique of the logic of this CATO article. However, after several readings I personally was unable to discern any coherent logic in it. The link is provided if you're interested.)