No, he's saying that Google is doing the first point, not this one.
The problem here is that Google's data on us belongs to Google. They can do anything they want to that data: take a crap on it, process it for better ad targeting, analyze social media trends and figure out who we associate with, and/or give it to people like the FBI/CIA/NSA.
Or, Google was hacked. That's also well within the realm of possibility as well. But I think governmental "persuasion techniques" like http://xkcd.com/538/ work much better.
Just look at the stories of Qwest former CEO. He said no.