That said it would be a cool idea to have a "google premium" where you pay a fee every month to keep all your data to yourself and don't recieve any ads
That not only completely destroys some of your fundamental rights, but also creates a selective pressure to force others to do the same.
I'm not exactly hugely bothered - but I assume not being signed into google limits them to cookie based aggregation?
The latter two (piercing the Incognito veil) are technically straightforward, but I doubt they do it. Google is pretty tightly bound by a certain set of ethics. By their lights, that creepy McDonalds experience is totally OK, but ignoring explicit privacy settings is not legit.
This is why they bother with dark patterns like making it inconvenient - but not impossible - to turn off Google Play's access to location data. They could just ignore you, but they won't. I'd bet they do collect and keep the information for some time [eg for anti-abuse], but deliberately don't use it. (And consequently feel very proud of how ethical they're being, compared with others in their industry, and how terribly unfair it is when people complain about them but not the sleazier ad networks.)
As I see it, the "advertising creepiness" problem has two factors. One is black-hats explicitly extracting information you're not sharing (eg Evercookie, canvas fingerprinting and friends). The other is grey-hats like Google, Facebook and MS, whose access to that data is perfectly legitimate in that you gave them permission (what, you didn't click through the three small buttons within 30 days to withold your WhatsApp contacts from Facebook? Too bad!), but whose market dominance and dark patterns make giving them that data less and less of a free choice. Conflating the two is easy but unhelpful.
I'm of the opinion that if they can extrapolate your age, ethnicity, gender, location, health, and "interests", then they can easily join two "disconnected" profiles.
You can turn off location tracking on your phone, can't you?
But on the other side: you cannot turn off requests for location information to be requested repeatedly on browsers or devices. Firefox (my primary mobile browser) surfaces dialogs for this information repeatedly. Every last fucking update of Google Maps, until I deleted and disabled the application in frustration, demanded location information.
So you'll still be bombarded with requests, and you've only got to fuck up once for the direct link to be re-enabled.
And despite that, you can be tracked to within a fraction of a km, and often to within meters, by other means.
Defaults matter.
They still track what IP you connect from, and can correlate this to a physical address. I can connect to google and get search results tailored to my physical location, even if location services is not allowed for their site.
I think it depends entirely on what your ISP is handing over for location data. Mine clearly doesn't hand over anything useful.
Is it really a "bit of info" though? Or is it your complete physical movements made with your phone, every web address you type in, every website you travel to (and search for) from Google search, every site you are are shown an adsense ad upon, your detailed browsing habits via Google Analytics, the entire contents of messages transcribed by Google Now, every app you purchase and use...
They appear to have controls to limit how this data is used today - a very good thing. However, we also have to trust every employee at Google now and in the future, as well as any company which Google subcontracts out to now and in the future, and any company which may eventually acquire Google, (not even thinking about Governments) to also respect our privacy with regards to this data.