I have to disagree with you there. Google may reach a point where I'm no longer comfortable sharing my information with them. If that happens then I'll be switching immediately. I don't think it's a foregone conclusion yet though.
I would expect that the more a search engine knows about me the more relevant my results will be. I have yet to see a compelling argument why that isn't the case. Since I use a search engine for the sole purpose of getting the result I'm looking for as quickly as possible, I am more than happy to make the trade off.
Finally, someone in the tech world who agrees with me... Is it really a bad thing that Google knows you like x product and shows you things related to it instead of completely irrelevant?
Yes, actually. I don't think you understand just how pervasive Google's presence is on the internet. Install Ghostery or similar sometime. Then watch where Google Analytics shows up. This will be some rather surprising places, including porn sites and things you might find yourself feeling rather sensitive about.
Remember, not only does Google have records of every search associated with your IP, but they've spent a lot of work trying to differentiate and distinguish people as their IPs change. They also index all email you receive using their services or if your place of employment uses those services.
In sum, this is actually a very detailed picture to paint of someone. It's not a matter of simply not using Gmail or Google, they've infested the internet with bugs that still provide detailed information of where people have visited and it's actually a bit of effort to slip under their radar. More effort than the average person will ever spend, anyway.
And it's not like you can have them remove what they already know about you, you just have to write that off as a matter of record now. If you still think this is a good thing to hand this all over to a company that owes you absolutely nothing and whose existence largely depends on holding this information about you...
"Then watch where Google Analytics shows up. This will be some rather surprising places, including porn sites and things you might find yourself feeling rather sensitive about."
I'm not a huge porn surfer but when I do find my self in certain corners of the internet, I use private browsing mode and a vpn. I doubt Google is using that as part of my profile.
The rest you say doesn't bother me as again it is a trade off. I trade information to get good search results.
Imagine a service by Facebook / Google / Whoever Inc. where you can purchase a slice of a user's info / history.
"Brad seemed to really know his stuff in that phone screen, let's go ahead and purchase his past 6 months of search history before we bring him in for an interview". (sub in Facebook profile, etc.)
I'm not saying this will happen. I hope it never does. But there are definitely incentives in place right now to make this a reality, and I haven't event touched on big brother's back door access.