MS killed Netscape by offering their browser for free and including it with the OS. If Google can create an OS that they can distribute for free that works pretty seamlessly on less powerful devices, MS could have a big headache. Netscape basically killed itself by not investing in the product after it went public. Take the profit and run. IE offered a good working browser that didn't need extra add-ons constantly. The fact that it was free helped, but if Netscape continued to offer a better product people would have bought it.
That said, I still don't trust google.
Can't argue with that. My biggest gripe about IE is that once MS got 90% of the browser market, they totally quit innovating. They didn't even come up with tabbed browsing until Firefox started threatening them. MS planned a "feature" called "keywords," where the browser would read text from a web page and automatically create a hyperlink to a MS "partner" web site. This would have taken the ad revenues from the site creator and given them to MS. If, for example, I did a review of a digital camera, every time the term "digital camera" appeared in my text, MS would have turned that into a hyperlink in IE, and my web site would link to one of the MS partners. MS would have kept all the ad revenue, and every content provider would have been providing the information for MS with no compensation at all. There was so much screaming about it that MS backed off and it was never implemented.
So, I don't trust MS, but I completely agree with you about Google. I got a Gmail account, but never used it. Despite the fact that I never used it, never posted it to a web site, and never sent an email to it, it gets about 60 spam emails a day, usually of the "Increase your size" or "Refinance your home" types. This probably means Google not only sells their information, but sells it to the sleaziest of phishers and scammers.
After their capitulation to Red China, I'm also convinced they'd have no problem doing data harvesting for repressive governments in exchange for political favors and exemptions from laws.