Europe spies on its citizens in other ways. For example, with CCTV all over Britain. Heaven forbid a company should provide its opt-in users with a marginal service, and spy on them for a little bit of profit.

How does the quote go? "Don't spy. Government hates competition"

EDIT: I should also point out that if yes, google data goes to the US gov't (which I believe in a qualified manner) one could chalk up the european shutdowns of google to basically just be jealous of the US's access to that data.