I think they receive more criticism than they deserve. And people ignore a lot of the good things Google has done to help protect their privacy. For example when the US government requested search records for the ACLU v. Ashcroft case. Yahoo, Microsoft, and other search engines were more than happy to voluntarily comply, Google was the *only* one that told the government to go pound sand. And they continued to fight further requests in court. Then in the Viacom v. YouTube case when the judge originally ordered Google to hand over account information that could allow Viacom to identify people who uploaded copyrighted material. Google fought this tooth and nail and eventually they were able to reach a compromise that allowed Google to anonymize the data before handing it over. Google has also been involved in lobbying to get the laws changed to better protect privacy online (for example, making it necessary for law enforcement to get a search warrant to access emails and stuff like that, currently they only need a subpoena). Google has a vested interest in cloud computing, and they know that if it's ever going to catch on, users have to be confident in the privacy and security of data they store online.
Of course they've also done a lot of stupid stuff. Schmidt's comment about if you're doing something wrong maybe you shouldn't be doing it was misconstrued, but still a really dumb thing to say. Also the data collected from open WiFi networks was probably an honest mistake, but still very embarrassing for them. But I think if you look at their history, they've done a lot more good than bad and obviously do care a lot about users privacy and public opinion.