You're saying that having Google manage the identities will not provide Google with all the data and perhaps even make them trackable by Google?
What makes you think so?
Cloud identity doesn't appear to be something that you deploy in your network and that is completely isolated from the Google cloud. Quite the contrary.
Whatever google can or cannot do with the data depends on their ToS but that is a problem for the company that contracts them to deal with as it's their data; not the users.
Most importantly, virtually all PaaS and SaaS solutions (office365 being the most well-known) already operate like that; on-prem services are getting pretty scarce nowadays on the enterprise world.
Cloud identity doesn't appear to be something that you deploy in your network and that is completely isolated from the Google cloud. Quite the contrary.