I don't think this is a fair point as most people who are engaged in anything online don't have the technical wherewithal to correctly abstain. How many people do you know who are not directly involved in tech that would even begin to fathom what you meant if you told them to "add a 127.0.0.1 alias to your /etc/hosts file"? Breaking it down further, how many would know what "127.0.0.1" meant, or even what "/etc/hosts" was?

And what if yahoo does it too (as I imagine they would), and so does Microsoft, and Facebook, and Foursquare... at which point you can't abstain any more?

I also can abstain from using the pensions, or public doctors, etc... Sure the government _can_ know some information, but I would imagine there's a lot that's optional there too. It's just that the alternative is so bad that it's not really an option. So would a future controlled by corporations.

You mean abstain from any website that doesn't block google from crawling it and that might have your personal information, either directly from your participation or by aggregating your information from other sources.