What is there not to understand?
Although I fully agree that there are major security concerns here lets not make things worse then they are, shall we?
One of the authors claims is that Google uses overlapping terms. So "Personal information" with "Information" and "Sensitive Information". But how hard is it really to follow up?
"Information we collect", obviously this is a broad term because it can include anything. Its split in two; stuff we give them (by opening an account), and stuff we provide through use of their services. And here its made fully clear what's being collected: "device information, log information, location information, unique application numbers, local storage (wtf?), cookies & identifiers". All of these terms are described in a separate paragraph.
So if you, like me, go WTF? after reading "local storage" (are they keeping track of my free diskspace?!) then read the paragraph: "We may collect and store information (including personal information) locally on your device using mechanisms such as browser web storage (including HTML 5) and application data caches.". What is there not to understand here?
And if you wonder what a cookie is then Google has all those so called "key terms" covered as well:
And to finish, Google even makes it quite clear how you can "fight" this. In short; review & control info you provide, view & edit ad preferences, check your profile, control who you share info with (google+ related), and you can even take information away from them:
One whole site dedicated to help end users of Google products (Youtube, Calendar and even Analytics) to "get the f* away!".
Even more: (quote from the policy page): "You may also set your browser to block all cookies, including cookies associated with our services, or to indicate when a cookie is being set by us. However, it’s important to remember that many of our services may not function properly if your cookies are disabled. For example, we may not remember your language preferences. "
Do I think Google poses a certain threat wrt privacy? Absolutely! Do I think that they may indeed violate certain laws? I wouldn't rule it out up front.
But I don't think you can accuse them of not providing the information you need to read up for yourself what and how they're using whatever information you provide them. Now, whether all this info is true or not... that is something I don't know. But it IS there.
IN FACT... In some cases Google is even more transparent than Microsoft is. Whoah, bold statement eh?
Windows 8 syncs a lot of your settings to the "cloud". So stuff as color scheme, desktop background, theme settings, etc. This isn't put on your local SkyDrive, nor is it put onto the 5Gb separate "synced storage" which is also part of the deal. No, this is put onto a "separate section which is only accessible by Windows". And in order to make sure all is secure its encrypted and whatever. Also (this is what I /do/ believe:) they don't sync sensitive data such as logon credentials until you confirmed that the new Win8 PC is to be trusted.
But; what happens with all the synced data when you stop using Windows 8? Heck; what /exactly/ is being synced? Even if you don't opt-in for this sync stuff then it /will/ store some data. I've tried by wiping win8 clean and re-installing it. Amazing; my desktop had the exact same theme (Naruto) as before. On a pristine Win8!
Try finding out /where/ this data is stored and more importantly; how you can access /your/ data in order to wipe it clean. You won't. I asked on TechNet 3 days ago, no response as of yet.