I don't understand how the actual data being streamed through the WIFI could be useful for anything other than spying. How does knowing what's in the packets change anything about how they use it for location?
Because they were in a pretty bad position once they found out what was happening? I can see an "Oh sh-, we broke the law" moment happening at the highest levels of the organization.
At least one person at Google thought it could be potentially useful:
> The report, quoting the engineer’s original proposal, gives a somewhat different impression. The data, the engineer wrote, would “be analyzed offline for use in other initiatives.” Google says this was never done.
I think Google is guilty of arrogance wrt privacy, rather than a fiendish plan to spy on people.