How is Google's wifi data relevant here? Unless Google themselves operate the hotspot, they won't know what devices polled it or connected to it.
Near as I can tell, the privacy threat here is very specific. You come within a few hundred feet of a hotspot, and for as long as you are in that location, the hotspot receives polling messages with your MAC address. The hotspot's operator can in theory log information like "device with MAC address 00:11:22:33:44:55 was within a few hundred feet of [hotspot location], Sat Jul 14 from 00:29:05 to 01:13:22".
How big of a threat this is depends on:
1. The difficulty of mapping a phone's MAC address to an individual. Do we know this is easy? Is there a big database with this information? A quick search suggests that it's possible to spoof the MAC address on a rooted phone, so it could be configured to change randomly every few hours. That would seem to defeat this attack on privacy, though doing so may be outside the technical know-how of most people.
2. How common is it for those who operate hotspots to log, aggregate and share this data? I'm confident the locally-owned cafe down the street doesn't log this data. What if it's something corporate-owned, like a Starbucks? Is this kind of logging, sharing and aggregating to track users just a theoretical possibility, or is it actually commonplace? I'd suspect the former.
I don't have answers to the questions I posed above. But barring evidence to the contrary, I strongly suspect that setting a smartphone to wifi only makes location tracking go from trivial to at least moderately difficult.