It didn't seem to hurt Reddit at all when Reddit lost my account data early in its existence. Similarly, MSN did that years ago when I was a charter member, but that snafu alone didn't seem seriously to hurt MSN's reputation. It's annoying to me to lose a username, and I don't give repeat business to services that trash my account data in a way that causes me to be unable to use my preferred username, but plenty of people sign up for online services based on the recommendation of a friend (or perhaps an advertisement) without doing exhaustive research on the company's record of technical competence.
The main thing is negative press. Google is already big enough that people don't need to look them up to hear about them. No news outlets really cared if you lost your very old Reddit username, but news outlets do care if it's Google losing your username because news about Google makes them money.
