Susan Wojcicki, the Google vice president who's also the sister-in-law of cofounder Sergey Brin, announced that Google would start tracking the websites people visit, wherever Google serves ads — which is something like 90 percent of the Internet worldwide. Google will then assign "interests" to those users based on their online browsing, and serve up ads accordingly.

As Google product manager Shuman Ghosemajumder explains in the clip above, Google is making it easy to modify the interest information Google stores. You can opt out, but then the "ads will be less relevant to you." (The horror!) What Ghosemajumder, Wojcicki and the rest of the Googlers are really hoping you'll do is add or subtract interests to the list rather than opt out — and thereby give Google even more information about you.

If anyone bothers, that is. In a survey of Internet users from March 2008, 91 percent of respondents said they would make use of privacy tools if better ones were available. But they are — Google's hardly a pioneer. Yahoo announced a similar opt-out scheme last year, and less than 1 percent of users bothered to visit the ad-preferences page.

The truth is that privacy is a problem everyone likes to talk about in public, and no one actually bothers with in private. It's a handy bugaboo for activist groups, a reliable topic for pundits and journalists. A trendy thing, perhaps, to whine about in online message boards.

But is it relevant to our online lives today? In an age of oversharing, when we update Facebook with every emotion and Twitter every Web page we come across, when we blog, blog, blog it all, is Google really the biggest threat — or is it us?

And if it's us, where's the preference setting to turn it off?

Susan Wojcicki, the millionaire sister-in-law of Brin who also holds a management role in the company, announced the job cuts in a blog post, as she laid out plans for Google to exit the business of brokering radio ads, a business it entered in 2006 when it bought dMarc Broadcasting for $102 million.

Up to 40 Googlers will lose their jobs, a small percentage of the 20,000 remaining employees at the search giant. But the real cut here is to google's ambitions.

dMarc was Google's first big move outside online advertising. It followed swiftly with announcements of forays into selling ads in newspapers, magazines, and TV. The strategy had more to do with Wall Street than with Madison Avenue, though: Google desperately needed to create the illusion for shareholders that it could tap more than just the market for Internet search ads.

Google has already pulled out of print advertising. Now radio is gone. Will TV advertising be next? Wojcicki, in her blog post, insisted that Google would keep trying to break into the TV business. The rationale: Like the clicks that give Google feedback on which ads work and which ones don't, Google can track when TV viewers change channels in the middle of a TV ad.

The feedback loop of clickstream data has made Google victorious online. The more ads it sells, the more data it has; the more data it has, the more accurate its targeting is; and the more accurate its targeting, the more money it makes for advertisers and publishers, drawing yet more ads. Microsoft and Yahoo, with a smaller base of advertisers and users, never stood a chance.

That dynamic simply doesn't exist with radio or print advertising. And the channel-switching data Google touts simply is not informative enough to shape TV-advertising campaigns.

Napoleon's rout in Russia, far from home, was followed in a few short years by defeat just outside the borders of France in Waterloo. His army was still mighty after Moscow. It was the long, cold march back home that devastated it. Could Larry and Sergey's hubris lead them to a similar defeat?

The billions gushing in from Google's search monopoly don't make for a good story. Whenever Google's PR executives have looked to drum up press, they've led with the candy-colored offices, the free food, and the copious free time. All of those are now on the chopping block — which leaves not much to talk about at Google except the profits.

The Wall Street Journal takes a look at Google's new push for cost cuts. As others have reported, Google is curtailing service at its cafeterias, reducing hours and restricting guests. A third of Google's 30,000 workers are contractors — and many of those jobs will disappear. (Conveniently, when a contract ends, it's not deemed a layoff.) And superfluous offices are being shut.

More importantly, Google's employees no longer have free rein to pursue their own ideas. Google's engineers can spend 20 percent of time on side projects. That freedom remains, in theory, but the progress a lone engineer can make on a new website without hardware and additional personnel is limited. The new message: Fiddle all you want, but don't expect any money from Google to back your creation.

When Google went public in 2004, founders Larry Page and Sergey Brin told shareholders to get ready to be taken for a ride. Not in so many words, of course. But in the company's IPO prospectus, they defended the company's already-lavish perks, and said that investors should expect spending to go up, not down.

But Larry and Sergey have grown tired of coddling their employees. Far from being grateful, the perks have made employees feel entitled. Brin in particular has complained about workers taking bowls of M&Ms and free bottled water for granted.

Why should Google's founders care, really? They seem increasingly detached from Google's core business, preferring to spend time on rockets and electric sports cars rather than optimizing AdWords. They increasingly deal with a small core of early Google employees, all IPO lottery winners, who are similarly insulated from the economic reality of living in one of the most expensive areas in the U.S.

A famous example of their cluelessness: Brin allowed his sister-in-law, Susan Wojcicki, also a Google executive, to spend millions of Google's money on a new child-care center which dramatically raised its costs. Rather than revise plans to make child-care more affordable, Google started charging employees nearly twice the market rate.

Investors will be unbothered by Larry and Sergey's change of heart. And employees, after they get done grumbling, will likely content themselves with the reality that they still have jobs.

No, the people hit hardest by this will be Google's flacks — and the servile journalists who so eagerly celebrated Google's lava-lamp culture. What stories will they tell now? How Google is cutting corners on the organic foie-gras hamburgers in its cafes?

Woj's new disclaimer reads:

I am a long time high school journalism teacher at Palo Alto High School, Palo Alto, CA, but I also have children who are either employed by or otherwise have a financial interest in Google. I am not employed by Google and own no Google stock.

The disclaimer is true in a Clintonian sense. However, Woj does not say she has previously been employed by Google as an "educational consultant" from 2005 to 2006, creating several programs which promoted Google to teachers. Her otherwise lengthy Huffington Post bio does not disclose this fact.

That's not the end of her conflicts of interest. Woj joined the board of Creative Commons, a nonprofit group which promotes alternative means of licensing copyrighted works, in July. Earlier this year, Wojcicki promoted a Creative Commons project without disclosing any ties to the group — such as whether she was, at the time, in discussions to take a seat on its board. At the least, the appointment has the appearance of a reward for her positive coverage.

Which makes me think that disclosure is simply not part of the journalistic curriculum at Paly. Susan Wojcicki rented out her garage as Google's first office; the Wojcicki family has been entwined with Google practically from its inception.

Woj's Google obsession in the Huffington Post would be less disturbing, perhaps, if she stuck to promoting Google's nonprofit efforts. But some plug for Google's products seems to sneak into her writing, too. Whether or not she's got a current, personal financial conflict of interest, she's clearly got an emotional one. Would Bill Gates's mother-in-law bash Microsoft products?

So perhaps Woj is incapable of seeing a tie to Google as something worth disclaiming. Perhaps she has so internalized its don't-be-evil worldview that identifying oneself as connected to Google feels like bragging that she's a good person. Doesn't every good person support Google, the company of good, and all the good it does in the world?

If that's really what Woj believes, she should exercise the critical thinking she ought to be teaching her in the classroom and recognize that her bias runs so deep that she can't even write a truthful disclaimer. And if so, she should stop writing about Google, Creative Commons, her daughter Anne's genomics startup 23andMe, and the various other investments her extended family is entwined in. I can think of no better example Woj can set for her students.

And if she can't, or won't? Perhaps its time for Paly's administration to stop letting her teach her journalism students the wrong lesson.

The Dennis Troper & Susan Wojcicki Children's Trust — Troper, Wojcicki's husband, also conveniently works at Google — filed in May to sell $1.2 million in Google shares. Which raises the question: Why do they need Google-subsidized, mommy-approved childcare? With that much in the bank, the kids could cut Mom out of the equation and hire their own nanny. It would be a lot cheaper than Google's gold-plated daycare, which reportedly costs the company$50,000 per kid per year.

Nocera reveals that, at Wojcicki's behest, Google decided to upgrade its childcare to a hyperluxurious standard, including adopting the Reggio Emilia approach to pedagogy. The result: At tuition rates of roughly $14,000 to $19,000 a year, the subsidy paid by Google ballooned to $37,000 a year. From that followed a tuition hike to as much as $29,000 a year, at which price Google still loses money.

At no point, it seems, did Wojcicki or any of the others she involved in planning Google daycare do a market-rate analysis. They simply built the childcare facilities as they saw fit, and then priced it based on cost, not the going rates — even for the kind of quality care they professed to seek.

The Scandinavian School in San Francisco, for example, offers full-time Reggio Emilia daycare for $16,000 a year for infants, and less for toddlers and preschoolers. If the Scandinavian School charged Google's outsized rates, it would run a nearly 50 percent profit margin. Google, by contrast, is losing money by the fistful on its childcare.

So Google has on its hands a disaster: A disaster for parents, a disaster for children, and a disaster for Google shareholders. How does Google respond?

Not by fixing the problem, but instead by lying to a New York Times columnist. Nocera, a famed reporter, quotes Brin twice. Google PR repeatedly denied that Brin made these comments — an unbelievably brazen act, considering the remarks were made before large groups of Google employees. A sampler:

At a T.G.I.F. in June, the Google co-founder Sergey Brin said he had no sympathy for the parents, and that he was tired of “Googlers” who felt entitled to perks like “bottled water and M&Ms,” according to several people in the meeting. (A Google spokesman denies that Mr. Brin made that comment.)

But parents who talked to me said that several times during the six-week-long day care brouhaha, Mr. Brin made comments indicating that he viewed the whole thing as a giant economics experiment. “This is a supply-and-demand issue,” he told one group of parents — adding that Google needed to charge what the market would bear. (Through a Google spokesman, Mr. Brin denies making such a statement.) Given that Google has lots of pre-I.P.O. millionaires, it can clearly charge a lot.

Of course, Google PR would deny that Brin made these statements. They are damning; they suggest the founder is out of touch with rank-and-file employees, and callous in his treatment of them. He surely is, but it is unseemly to admit as much.

Wojcicki, with Brin's permission — what an indulgent brother-in-law! — is conducting an experiment on her fellow Googlers, and their children. But Googlers did not sign up for this experiment. Any parent knows how difficult it is to find good, affordable childcare, and how wrenching for children it can be to change providers. The real test going on here isn't some kind of supply-and-demand economics experiment. It's how arrogant Brin and his clique can get before his employees revolt.

Wojcicki has modest tastes in cars: She chauffeurs her kids in a Honda Odyssey minivan. But when it comes to spending Google's money, she is far less thrifty. Wojcicki, an early Google employee, was dissatisfied with Google's Kinderplex, which has been run by an outside firm, CCLC. CCLC is used by many companies in the Valley, including Cisco and Electronic Arts, but it wasn't good enough for Wojcicki, who pulled her children out, and set about designing a new Google-owned facility, with a blank check from Brin.

The Kinderplex is losing its lease this month. The Woods and the Wetlands, as Google's new child-care facilities are known, are implausibly plush — and proved hard to staff until Brin and cofounder Larry Page were dissuaded from rejecting caregivers who didn't have a 3.5 GPA from a top school.

The price is likewise out of sight. One of the new centers has 18,500 square feet for 80 children — or 230 sq. ft. per child. Minimum licensing requirements are 35 sq. ft. of usable floor space per child; a more generous recommendation is 50 sq. ft. per child. Even allowing for some space for other uses, that seems extravagant. Brin told employees that the new centers cost $40,000 a year per child to operate — more than the roughly $30,000 a year Google planned to charge employees, but also far above market rates.

That number was also a 75 percent increase over Kinderplex's near-market fees, and the figure sent Googlers, ever driven by data, into a frenzy of mathematical modeling. Detailed proposals for reducing the cost of the centers came out — and were ignored.

Google's chief child-care officer sent an email out a few weeks ago promising that prices wouldn't be raised 75 percent. Sure enough, they weren't. Instead, Google's head of HR, Laszlo Bock, told employees earlier this week that prices would be raised a mere ... 70 percent.

The monthly fee for a preschooler is rising from $1,070 to $1,710; for an infant, it's rising from $1,470 to $2,390. At those prices, one parent says, if you had two kids, you could afford to just hire a nanny instead.

For the likes of Wojcicki, a top Google executive and an IPO lottery winner, those costs are inconsequential; having a luxurious child-care center near the Google campus is more important. But for workaday Googlers, especially those who didn't join the company before the IPO, those prices are out of sight. Even Bock, Google's chief people officer who was saddled with the unfortunate task of explaining Wojcicki's decisions, has told fellow Googlers he will take his children elsewhere rather than pay the new rates.

We hear that one top Google lawyer has quit over the price hike — not because she couldn't afford it, but because the way Brin's inner circle decided it, without consulting the data. (This departure may come back to haunt the company.)

Google used to be a place where rank didn't matter: If the numbers showed you were right, Larry and Sergey could be persuaded. That Brin let his sister-in-law's wealthy whims rule over the interests of hundreds, if not thousands, of working Googlers shows that Google is becoming yet another big company, with an insular clique at its heart. What it proves is that at Google today, it's not what you know. It's who you know.

How lucky for Wojcicki's kids that her mother has friends in high places. How unfortunate that other parents don't. One can't fault Wojcicki for wanting good things for her children. But doing so with Google's money, creating a luxury service affordable only to top executives and IPO lottery winners? That's inexcusable.

But that was well before talks had started. Smith was likely catching up with Zuckerberg, whom she hadn't talked to since Google and Facebook last held tentative investment discussions more than a year ago. Google higher-ups are, no doubt, kicking themselves that they didn't buy Facebook back then, before its valuation soared into the billions of dollars.

Left out of the loop: Megan Smith's partner, Kara Swisher of AllThingsD, who's been covering the Facebook story and broke the news of Google and Yahoo's interest, but heard of Smith's involvement in the negotiations from someone else, which led to some frosty moments at home. "Megan's the most useless source of all time," Swisher told me.

Mayer's admission also destroys another myth spun by Google PR: That Susan Wojcicki deserves credit for AdSense, the current name for Google's content-matching system. In July, I exposed that as a lie by pointing out that AdSense was a product acquired by Google, not something Wojcicki came up with in a brainstorm. Google ur-spokesman David Krane, at the time, countered that by telling CNBC that Wojcicki "directed and invented" Google's in-house version of AdSense, which launched after the real AdSense but before Google acquired the company that made it.

Now we know the full truth: Paul Buchheit invented what Google now calls AdSense — not Wojcicki, and certainly not Mayer, who can only claim that she didn't try harder to stop it. Of course, it's convenient, politically, for Krane and others to credit Wojcicki. She is, after all, Google cofounder Sergey Brin's sister-in-law.