A couple of thoughts in light of Google's divergence from the norm as far as PII is concerned (see previous post On IP and PII: Merely the Location of a Computer? Non!). The debate over what exactly constitutes Personally Identifiable Information is not merely academic or a sidebar for policy wonks, it goes to the heart of how data about people should be handled, stored, shared, protected, etc.
To a certain extent I sympathize with Google in that the best definition of PII is a relative or functional one. Even my name, Stephen Cobb, has limited value in identifying me--it identifies me only in limited circumstances--even though "name" is included in most lists of PII identifiers. The reason for this is the popularity of Stephen as a name for Cobbs (you could say "the commonness of Stephen Cobb as a name," but hey, I'm trying to maintain some PPD here--personal pride and dignity).
My wife's name, Chey Cobb, is clearly going to be PII in most situations. The same is true of my friend Michael Miora (there's only one, AFAIK). But even something like "Stephen Cobb in ZIP Code 32084" does not identify me because there are several people who share these identifiers (I know because my friend Bruce Dufresne, who knows more about the history of the automobile that anyone else I know, knows two Stephen Cobbs and sometimes calls me by mistake when he wants a ride to the car auction). So, the extent to which any piece of data can be considered PII depends upon the context and the aggregate.
As for Google and your IP address, it seems like they may be putting too much store in its value. Consider what happened the last time I was visiting my brother in England and Googled a number of different pieces of hardware, some for my him, some for me. Google was a mess. When I Googled from my hotel room, Google assumed I was in the Netherlands (the hotel's Internet service was provided by a Dutch company).
When I Googled from my brother's office in Surrey, Google really didn't want to tell me about product offerings in the US because I was Googling from a UK IP address. And when I am in America I cannot see the ads served up to UK visitors to his web site, School Sports Action TV, because Google is making assumptions based on my IP address.
In other words, my IP address might be of limited relevance with respect to what I want to see on the Internet. It seems like it would be better to have a "focus" option in Google that I could select to shape my results rather than let them be determined by my IP address. Of course, some folks in marketing are then going to want to know where the people live who select UK as their focus. My point is that my IP address does not reliably provide that data. So Google might want to think about how hard it wants to defend its collection and retention of that data.