Sure, image classification can be done anywhere. People could classify their own images without any algorithm. The point is, image classification isn't scary, and I don't see how it could be. Using classifications to manipulate people might be scary, but that has little to do with whether it is done by Google, the server, or the client. If you don't want your images classified, don't send them to photo stores whose entire reason for being is the organization and classification of data.