I'm not making fun of you, I'm just guessing that the value you get from my service is worth more than the concerns you have about your privacy. Come join me. I promise I won't hurt you so much. You'll enjoy it.
Specifically because Schmidt made a career as a lobbyist for privacy erosion, I think he's open to criticism on this basis, even if he is not guilty of coercion.
If it were some random person who was just developing a product I would agree with you to leave well enough alone, but I think the lobbying angle is enough to clear the bar of "theses actions should be publicly scrutinized".
Edit: for the record, I did switch off of gmail too :)
It is the United States government, their laws, and enforcement.