Between two misinterpretations and quoting a 'quip' to imply that google somehow things it should make all your decisions for you, it is a pretty shoddy post.
If anything, he's saying, don't use Google for illegal searches. Seems like a valid argument and we can apply that to Schmidt's more recent comments too.
That's not Google's fault. They don't want to leak that information to the government; they have to. So if you don't want Google to leak that information, don't type it into Google. Use Tor, or figure out how to kill someone yourself.
Or, as Schmidt advises, don't kill anyone.
What if the fundamental act is something you consider innocuous like "donate money to charity"? And the charity is at some point in the future considered by the gov't to be a funnel for terrorist activities.
Or perhaps you do multiple searches along the lines of "jewish traditions". And at some point in the future the gov't declares Judaism illegal, targets jewish-sympathizers and uses Google's data to identify them.
The point (I believe) of the "define illegal search" comment is that what may be considered legal or harmless today isn't necessarily non-criminatory tomorrow.
(On the other hand, there's no such thing as an "illegal search" on Google, so perhaps that was the point of that comment - regardless, my point stands)
In other words: Don't use the Google for anything if you don't automatically accept everything the gov't decrees today and tomorrow.
That is, effectively, what Schmidt is stating when he says "if you have something you don't want anyone to know, maybe you shouldn't be doing it in the first place". Which is also why that statement, in context, is just as creepy as Gruber states.
Great point, in hindsight. It's much harder to know these things when you spend a lot of your time in front of reporters.