As often as I think to myself how dangerous it is that I've allowed Google to have so much of my information - I'm constantly impressed by how upfront and ethical they are.
If you look at the full quote [0], it's actually quite reasonable and forthright. He's explicitly warning users that search engines, including Google, are subject to inquiries from law enforcement, and thus, should not be considered secure, rather than dismissing privacy out of hand.
[0]: http://www.schneier.com/blog/archives/2009/12/my_reaction_to...
At the end of the day, Google has done more good for privacy then all the users screaming at them.
(I think I'm being sarcastic.)