That's true, there are lots of companies with access to sensitive data. Internet service providers for people not using encrypted connections have even more access to info because every single piece of data has to pass through their servers before it even gets to Google - this might be the motivation in moving everything to SSL encryption. Banks have huge amounts of data too, all your purchase records. That always gets me when bank employees (especially ones that look like they just finished school) say things like 'ok I'm looking at your bank statements just now' and I'm like I don't even know you but you're trawling through my recent purchases.
There are varying levels of info that people want different companies to have. Private healthcare can know about your intimate surgery but not the bank. The bank can know about the level of debt you have but not an advertising company. Search engines are unique because they're almost mapping your thoughts and activity in a timeline. If you made a parallel in real life of what Google and others are like, it would freak people out.
Imagine that you go out and someone is sat outside your house, they know where you live (equivalent to companies knowing IPs or addresses entered). They see you walking out with your family so they know what everyone looks like (equivalent to matching online activity from multiple people from the same IP and social networks). They follow where you go next and see what shops you go into (equivalent to tracking searches). You go into a store, they can't follow you but they've put promotional stalls in store and they watch what you're doing (equivalent to on-site ads and tracking cookies). You ask advice in store for the best products (equivalent to search or comparison features on sites so they know what products you're interested in). The person can follow where the kids go to school or parents go to work (equivalent to tracking logins or ads again in multiple locations).
If someone did that in real life and compiled that data over a month and then presented it to a family showing all the info that a complete stranger has on them, that would completely freak them out. They might even call the police because it's tantamount to stalking. The only way people aren't freaked out by it online is that people don't know the extent of it. It's the same with the government monitoring. If we hadn't found out, nobody would be talking about it.
But in the end, the objection comes down to perceived harm. Even if you feel uneasy with people knowing things, what's the harm they will do to you, even in the real life example? Google's stance is along the lines of 'if you have nothing to hide, then you have nothing to fear'. It's commendable that Google has operated so long with data on so many people and yet their databases haven't been hacked unlike countless other companies. Nor have they caused widespread harm to all those billions of people. People fear the potential for harm, which is fair enough and people should be more responsible with their data online and hopefully companies won't abuse the data they do get. It's another of those unavoidable conflicts between freedom and security.