The Orkut privacy policy debacle is a bit of a storm in a teacup - I think it's more a case of an overzealous suit tacking something inappopriate on at the last minute than something intentionally evil. But that's not important.
What is is that it's striking evidence of Google's most critical resource and capability beginning to decay - the ability to learn from (and harness) users. These underpin it's strategy, and make it nearly impossible to replicate - without them, Google's advantage is reduced to technological superiority alone, which is easily outcompeted.