It is not the information in the DNS that will be a concern, it is the information about every request. Each request has originator information like IP and some more as well. So, they can probably link geographical demographics with DNS requests, without affecting your data privacy.

Given the wording in their privacy policy, privacy concerns are really a non-issue. I am sure people will complain for days about it anyway.

Given the data and the possible targeted advertising, you have to wonder if such a competitive advantage is a good thing. They could be raising the barrier to entry fairly high if this is the case.

Regarding the type of company Google is, they are more of an advertising and data mining company. Almost everything they do seems to gather data for the purpose of marketing or advertising.

I was curious to see what you were going to say about this one. Given that they will not correlate the data with any other service, I am more OK with it than I though I would be.

As you say though, is it a step too far?

As for the data concentrating, I’m see it as more good than bad. Of course, we have privacy concerns, however given the short storage of individually identifiable logs, it doesn’t seem to be the end of the world. If they do end up using the longterm generalized data for marketing, perhaps it will actually be a good thing – advertisements would be better targeted to appropriate, interested audiences, which improves the experience for those interested and reduces annoyance for those who aren’t. The technical uses of the data to improve the technology is clearly good.

And in response to Kyle:
I think we’re well beyond the point of considering Google as a “search engine company,” and instead as more of an online experience company (not the best description, but first one that came to mind) given the extent and age of their products beyond search.

*That* is far too much control for a search engine company.

–Kyle