This suggestion has come up a few times now for different countries: China, Australia, Pakistan and probably many others. There looks to be a trend around the world of governments and media companies taking aim at Google for a wide range of things. What it really comes down to is that Google provides the ability for almost anyone around the world to find just about anything. This makes information easily accessible and threatens the artificial barriers to knowledge and 'fair use'.
Google is the largest search engine and has the most at stake so it is the obvious target. I would compare this lawsuit to suing the yellow page because they list a shop that has a collection of real and pirated DVDs - I wonder if they've tried that yet?