Privacy issues on the web are abundant; from credit card numbers to personal information to social security numbers, these issues are something to be concerned with. However, I believe that a lot of our privacy problems on the web are our own fault. When it comes to websites most people don't read any of the legal documents that they must agree to when registering for that site or its services; legal documents that pertain to many privacy issues that people might have. Another problem is privacy options that are provided by the website. Last year Facebook received a lot of criticism for making default privacy settings for users basically non-existent. They did not, however, remove those privacy options.
Regarding Eric Schmidt's statement about not doing what we don't want anyone to know, that's just silly. There are many instances that someone could think of that they might not want others to know about. I'm sure most people wouldn't want to have a colonoscopy performed in front of a large crowd of people. Regarding less socially acceptable practices on the Internet such as pornography, I believe that what's done in the privacy of your home is your own business until it becomes a public health issue (a meth lab spreading fumes to other rooms in an apartment building, for an extreme example).