Awesome point, although I would hope that their privacy policies would exclude them from that very possibility. Just because Google provides analytics does not mean they should have access to the specific data being collected.
"Hope" that Google would not use information that it has within its own walls to its business advantage is not a wise strategy.
I see nothing in Analytics' written TOS or Google's general Privacy Policy (because Analytics has no Privacy Policy of its own) that would prevent Google management/business-development from looking at Analytics data to evaluate any participating site. The same goes whether they are researching that site as an acquisition, competitor, or source of potential ideas.
In fact, I see nothing in their written policies suggesting any limits on the use of any information within Google at all, as long as such use has anything to do with "providing our services" or "developing new services".
The same thing goes for Toolbar and AdSense data, with respect to websites or individuals.
So, for example, if applying for a job at Google, there's nothing in their public policies that say they couldn't correlate your Google login with AdSense/Analytics/Toolbar data to examine your browsing history. I don't know that they've ever done that, and I would expect a big backlash if it became known that they did, but it's an example of something that doesn't violate their stated policies.
