So, why not just state in the terms of service that data is actually erased within N days/months after deletion? One could always list exceptions (such as business listings).
Either Google cannot really guarantee that the data is deleted (due to its storage system); Google wants to reserve the right to retain some data in the future; or it is actually retaining some data. Otherwise, there is no point in putting this in your ToS. All three reasons are pretty worrisome.
Also, what you say is provably false in a more general sense. Google retains all kinds of analytics/tracking data of internet users that you cannot have removed. When you visit a site with Google ads or analytics, Google is keeping data on you.
IIUC that is anonymized data. The whole point then is that it cannot be associated to your account, i.e. cannot be removed when you delete your account.
Otherwise, there's a shit-ton of law and regulations around this issue. I'm sure there are plenty of options for you to take when you think a company violates EU law. Safe Harbor got wrecked because a young fellow from Austria thought so and courts determined he was right.
Ten years ago, the ones telling people that agencies are storing everything by default, and Skype was bought/centralized to help with that were labeled as such. Nowdays it's "yea so"?
If we're actually keeping data, then that'd be a shock to me.