That, in a nutshell, is why I have no particular interest in web applications I do not myself host. Aside from the vast privacy implications, you are totally at the mercy of the provider. A standalone, self-sufficient client with the option of web storage and/or sharing, fine. All of my work on a box run by someone who doesn't even have any contractual or regulatory obligations? No thanks.
Yep yep.
Remember when knol was first introduced? It was supposed to be a "verified wikipedia", written by experts. Those experts (you, me, anyone) were to spend a lot of time, effort, and domain knowledge in writing high-quality articles... and in return we would receive a per-click royalty. This would incentivize the creation of actionable content that would something something revolutionize something synergy something leverage.
I remember thinking through the subjects for which I am credible authority, and considering whether to produce some knols in order to develop a bit of side income. I very seriously considered it... and judging from some of the knols I've seen, lots of other people went all the way.
Now we see how it all ends up. Just like the DRM game ended up. "Oh, sorry users, but this quarter we have decided that the project isn't profitable. Or we just hired a new VP and he's shaking things up. Or whatever. We're closing it down, so f*** you and your investment, you're just an externality."
I will now NEVER, EVER contribute content to a for-profit enterprise. Be it amazon reviews or knols or sidebar markups or whatever, that's it, I'm done.