Startups and developers are creeped out by of Google.
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What is Google's product? Really, If you were to sell Google, what would you say it's product is?
Think about it long and hard, and what you end up with (I believe) is the world's largest trove of personal data and information ever accumulated: email, voice prints, search data, location data, music preferences, sexual predilections, travel information, etc... And, they have an insatiable hunger to gather more data.
How do they make money off if it? Right now... selling ads based on the world's biggest recommender system.
Couple that with Google's strict NDA policy which prevents Googlers from being out and about in the community talking about what they are doing, and people really get creeped out.
Google's IP restrictions essentially prevent Googlers from working on a startup in their spare time, because it would compete with their employer, whose mission is to "organize the world's information". Which makes a deafening silence around the Googleplex when it comes to spinning off startups.
Finally, the current interpretation of Delaware corporate law states that a corporation must maximize shareholder value. In the next 20 years, Google is going to have to start extracting more value out of this massive database of personal information they are assembling. And, Google's secrecy and self-isolation erodes trust. No one has any clue or guarantee about what Google is going to do next. It's impossible to contact someone on the inside if the Google behemoth blindly steps on you. They have no customer service to speak of.
This is why people in the Valley are creeped out by Google.