Why does Google always need personal data? Whenever there is an app from Google Inc in the Android market, I am uncomfortable with their permission levels: Why do they always need read/write permissions to personal data/contacts and all our personal stuff?

Even though I believe Google, I am not interested in sharing my personal data with them. Can something be done -- like, limiting the permissions?
As Goggles is an app that you've said you're curious about, here are the permissions it asks for(copied from the Market web page):

This application has access to the following:


  Your accounts
  
  Google App Engine
  Allows applications to sign in to Google App Engine using the account(s)
  stored on this phone.
  
  access other Google services
  Allows applications to sign in to unspecified Google services using the
  account(s) stored on this phone.
  
  act as an account authenticator
  Allows an application to use the account authenticator capabilities of
  the AccountManager, including creating
  accounts and getting and setting their
  passwords.
  
  manage the accounts list
  Allows an application to perform operations like adding, and removing
  accounts and deleting their password.
  
  use the authentication credentials of
  an account
  Allows an application to request authentication tokens.
  
  Hardware controls
  
  take pictures and videos
  Allows application to take pictures and videos with the camera. This
  allows the application at any time to
  collect images the camera is seeing.
  
  Your location
  
  coarse (network-based) location
  Access coarse location sources such as the cellular network database to
  determine an approximate device
  location, where available. Malicious
  applications can use this to determine
  approximately where you are.
  
  fine (GPS) location
  Access fine location sources such as the Global Positioning System on the
  device, where available. Malicious
  applications can use this to determine
  where you are, and may consume
  additional battery power.
  
  Network communication
  
  full Internet access
  Allows an application to create network sockets.
  
  Your personal information
  
  read contact data
  Allows an application to read all of the contact (address) data stored on
  your device. Malicious applications
  can use this to send your data to
  other people.
  
  write contact data
  Allows an application to modify the contact (address) data stored on your
  device. Malicious applications can use
  this to erase or modify your contact
  data.
  
  Storage
  
  modify/delete USB storage contents
  modify/delete SD card contents
  Allows an application to write to the USB storage. Allows an application to
  write to the SD card.


Having used Goggles for a while, these all seem fairly innocuous, here are what Goggles does that needs those permissions:

Your Accounts
Everything under this heading is needed because Goggles links to your Google account and stores your Goggles history in your Google account, so that you can go back at look at your previous searches, even after you change phones. To do this it needs to access the Google account login credentials already saved in your phone's "Accounts" list, otherwise it would have to prompt you to log in to Google every time you open it, or re-save your credentials again itself, which is a bit silly when they're already stored centrally on the phone. If you have more than one Google account on your phone, then the first time you open Goggles it asks you which one you want to save your history into. There's a setting that stops it saving your search history if you don't want this.

Hardware Controls
The entire point of Goggles is to take pictures using the camera, it can't do that without these permissions.

Your location
Using Goggles you can take pictures of landmarks and buildings and have it automatically identify them. It uses your location to help it narrow down the guesses of what you're photographing. 

Network communication
It uses Google's servers and massive databases to help it identify the potentially billions of different things you could photograph and ask it to recognize.

Your personal information
*read/write contact data* You can take a photo of a business card with Goggles and have it save the contact details from the business card straight into your Contacts.

Storage
You can set Goggles to save all the images it takes to your SD card for later viewing via the gallery app (this is in the Settings and is off by default).



So, as far as I can see, they have a legitimate reason for all of the permissions that the app asks for that fits with one or more of the apps functions or needs. Could they also use these permissions for other purposes? Yes, but personally I trust the app to only use the access for the required purposes, after all Google has plenty of other ways to get all of that info, as I'm already syncing all of my Contacts, etc up to GMail anyway!