Obviously we cannot expect Google to provide their services for free as it's very costly to maintain such global infrastructure and their team of engineers, therefore in turn Google would need user data in order to provide advertising products and generate the required revenue. We must pay for using Google services in one way or another, and right now we are paying it by giving up our personal data.
In the end this will simply serve as another payment option for those who value their privacy more than cash. I suspect the majority of population would still remain at free tier. However with more options available, at least the public will no longer complain about potential privacy issues, and Google can also remove much of the unnecessary heat and focus off their back. There are just so many different ways Google can tweak and optimize these offers to satisfy public demand for privacy.
The current advertising in exchange for privacy model obviously does not work for all consumers so it's time to evolve.