If google really cared about privacy, they wouldn't have moved maps away from a subdomain. now if I want maps to have my location (logical), I need to grant google _search_ my location too.
Google doesn't care about privacy, but its easier for them to keep collecting your data if they can also keep it from getting unintentionally leaked to others. The last thing Google wants is for people to start thinking about the amount of data they're handing over.
Google has your location either way. What difference does it make?
I'm not sure I follow. maps.google.com still resolves?
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It's not all-or-nothing; sometimes some people at Google push for some things to improve privacy. Rarely happens when revenue is at stake.
Android used to ask you "do you want to alllow internet access?" as an app permission. Google removed that, as it would stop ads from showing up. Devastating change for privacy and security, great for revenue.