Proprietary trading does not necessarily involve insider information. "Insider" refers to those privy to exclusive data about a public corporation that have not been publicly released. Insider trading laws do not preclude trading on independently drawn ideas, and do not entail publicizing one's own reasons for deciding to invest, because those ideas do not originate within the company being considered for investment. An investment bank may trade away with whatever methods they have in-house, as long as they have not gained via information about the company that is not publicly available. “Private commercial sources” is vague, but if you mean paid databases like LexisNexis, Hoovers, or even 10kwizard, those just consolidate already public information in a more convenient formats. They don’t draw from insiders.

Of course, it's an open secret that insider trading is rampant in all major stock markets. You can’t police every pair of CEO golf buddies. I can’t provide a cite, but a study done a few years ago confirmed major movements shortly before (hours) major announcements with the vast majority of stocks in the Canadian exchanges. I’d expect the problem to be greater in the US markets.

What if you surveyed 100 Fortune 500 CIOs to figure out how much they're planning on spending with Oracle next year, and used that to trade Oracle stock? Is that illegal? It's certainly not coming from an Oracle "insider." That's what Google would be doing, but instead of 100 CIOs, they'd be aggregating data from millions of ordinary people.