Hardcoded DNS servers are common. Extremely common in a bunch of IOT devices, given how broken some ISPs are. This is a non-story and the only reason it's being upvoted is because Google is doing it, and they also control the DNS server.
You know what would be an actual story though? If Google used Google DNS to spy on people. If anyone has concrete evidence that they're doing that, that is a big fucking deal. Not some email about a google-complaint-of-the-week.
Edit: To be clear I'd agree that in a high quality product there needs to be a way to change the DNS servers. Then again, this is a $30 device to hook up TVs, and I've seen $200 routers lacking that ability.
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Edit 2, elaborating on the above: You make a cheap device that will likely end up in millions of homes and your #1 support issue is "It doesn't work [because my ISP is terrible therefore my network configuration is shit]!". What do you do? Do you tell your consumers to suck it up and talk to their ISP? Or do you… hardcode a DNS server that you at least know will work?
"Issues" like this one are non-issues and distract from the myriad of very real privacy issues coming out of Google. Yes, this should be configurable at the very least… then again, Google products aren't exactly known for their wonderful configurability.