It is hard when you are a multinational, multi billion dollar company. Hard to stay honest, hard to grow (where do you want to go today) and many eyes are constantly looking for the smallest crack, smallest controversy or in fact anything that will create controversy about you.
The new single Google 1 March 2012 privacy policy makes perfect sense. Big G is not saying anything additional to what they have already said, they are just combining all their services into one you, so that they can know you more intimately, give you what you want and make your life better, smoother and easier. They can also now serve you with better more suited adverts.
Big G already decides what you should be seeing and what not, so now they can also decide what you should be buying, wanting and thinking about.
Strangely, everyone makes such a big fuss about privacy policies but in the real world no company or business wants to supply your intimate details to another company as someone contacting you that you do not know is treated with suspicion anyway.
So the privacy policy fever is more about people realizing that there is a company that probably knows them better than they know themselves.