The privacy concern over Google’s Street View UK just got ugly, erupting in to a turf war between the Big “G” and a lobby group it says is too close to rival Microsoft (NSDQ: MSFT). Privacy International director Simon Davies filed a complaint about the service with the Information Commissioner’s Office on Monday. Wednesday night, he wrote his second letter in as many years to Google CEO Eric Schmidt, complaining Google (NSDQ: GOOG) is conducting a “smear campaign” against him.

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Davies claimed Google, which was in 2007 placed bottom of a 23-strong internet privacy table by Privacy International, is telling journalists that Microsoft pays two of the group’s members to stay quiet about its privacy transgressions. Davies said Google is claiming Privacy International has “entered in to a secret pact to discredit Google” by taking Microsoft money through two of its staff’s directorships of a separate privacy consultancy, 80/20 Thinking, and by the involvement of Microsoft PR agency Burston-Marsteller as an 80/20 partner. Denying a plot, Davies’ letter told Schmidt: “You should be ashamed of your actions. Google is coming across as a desperate company resorting to desperate measures.”