It doesn't bother me much for a simple reason: Sutherland's wheel of reincarnation applies to cloud computing. Right now there isn't enough processing power or storage on a portable device to store everything you would want out of a thing like this, but give it time. And then it's hardware, it doesn't have to be ad supported -- the device can know all about you, but it's your device.
So that's one possible future. And the tech they're developing is pretty agnostic to whether the information it collects is stored in the cloud or just on the device, so let's try not to be too pessimistic about something cool just yet.
True, then again the temptation for them to start feeding you personalized real time ads, were your whole life is their ad canvas, might be too great to resist. Lets wait and see.
Google's software is almost completely reliant on the Internet to function (except for occasional offline caching), and the exceptions are nearly all legacy apps.
So that's one possible future. And the tech they're developing is pretty agnostic to whether the information it collects is stored in the cloud or just on the device, so let's try not to be too pessimistic about something cool just yet.