There's obviously no inherent problem, but their reasoning is all theoretical and there's no reason not to expand it further based on their own logic. If you don't trust Google, why would you trust any of the other major players online like AWS, Azure, Cloudflare etc? Without those the internet basically doesn't work and you'd be better off not even bothering, thus meaning option 2 is the end result of the privacy minded.

> and there's no reason not to expand it further based on their own logic

And this is a textbook slippery slope argument. Also the clear difference between Google and the examples you've provided is the revenue model. The primary way Google makes money is selling user data to advertisers. next to social media sites, they're the most obvious targets for privacy-minded people.