I figure if anyone can shed some light on this subject its him.
He writes, "...there is plenty to get upset about regarding Google's new policy. Google has managed to wriggle into just about every area of our lives. It all started with Google search, of course, and that seemed innocuous. But later you could sign up for a Gmail account, and suddenly any searches you did while signed onto Gmail could have an identity assigned to them -- and Google roughly knew what was on your mind. Google Docs was another chance to gather data, and the social network Google+ really ups the ante. Every post is captured, and Google has access to information such as who is in your circles -- not only that you know those people, but what your relationship is to them, because you've defined your circles so carefully (family, friends, colleagues, fellow alumni). Google Calendar reveals where you are going to be. Google Maps gleans where you are considering going. Google Latitude knows exactly where you are right now. Picasa stores pictures, and if you carefully tag them, you have provided more information about where you have been and whom you have been with. Google Chrome keeps track of your browsing habits and history. Google Checkout and Google Wallet know what you are buying and where you are. The Android operating system can track every aspect of your cellphone usage, including the apps you have loaded. YouTube searches can reveal proclivities that you might not want other people to know about.
Until now, we could think of all of these as stand-alone services. Each had information about us, but the threat of privacy invasion seemed manageable. It's a different story when it all gets consolidated. Now, for all practical purposes, a single entity has the ability to put together your past, present and future. Who calls you on your Android phone can be combined with what you are searching. The interests you repeatedly post about can be combined with your location. Your appointments can be cross-referenced with your acquaintances' appointments.
What we know is that Google tries to monetize the information it has about the users of its services by selling advertising that is carefully targeted to their interests. Facebook and other companies do similar things. Some people have been sized up pretty well just based on their searches. Others have not. Wired recently ran a short piece on how Google currently can be inaccurate in its current analysis of a user's searches. After consolidation, though, there will be little ambiguity.
As the author also pointed out, it wasn't long ago that Google promised IT WOULDN'T consolidate all these functions...so as Google becomes more and more ubiquitous, so to is there access to everything we do. As Winkler points out, "Should it ever cross the line, then all of that information it has could be used for truly nefarious and malicious purposes, including extortion and harassment."