http://www.theverge.com/2012/4/25/2973849/google-drive-terms-privacy-data-skydrive-dropbox-icloud 

Let’s argue semantics for fun, ignore the privacy policy, and say Google could use your data to develop new services per the license.  They take your novel that you privately saved to your drive (you didn’t put it in the public domain) and Google uses the content for a new Google Paperback service that gives readers access to novels (free or paid). At the end of the day, you still own the intellectual property covering that item and you can revoke the license to Google.  Unless, of course, you put the novel in the public domain.  But if you do that, then anyone and their brother could republish your book for profit and Google’s license wouldn’t really matter.  Even so, use of our novel in such a service is out of the scope of operating, improving, promoting, and developing services.  While the such uses of the novel could aid in operating, improving, promoting, and developing the service, the primary use is outside of that scope.  The purpose of posting your novel would be to sublicensing the content to third parties.  That’s not something specified in the license you granted.  Alternatively, we could say Google’s use in such a case is to distribute licensed content in the public domain, which wouldn’t be authorized by the license you granted anyways unless you publicly put the novel in the public domain beforehand.
Google’s biggest problem with everyone’s interpretation is their desire to have one license covering all their products.  It lowers their legal risks to keep things consistent.  But verbiage that might be easily understood for something public, like Google+, seems improper for something like cloud storage.  But you ultimately own the intellectual property, that does not transfer.  This is just a license that lets Google do what they need to do in order to provide the service.  

A license is not a transfer of ownership, think of it like a rental agreement.  You can always revoke the license you granted unless the license itself state’s it’s unrevokable and some part of intellectual property law doesn’t overcome such a statement.  Now, the Google license does have one element that you technically cannot revoke–where it stays that certain uses under the license continues even after you stop using the service.  This is to ensure Google doesn’t have to make any crazy administrative systems to manage conent you post to Google that is out of your control once you post it, like a business listing in Google Search (the example used in the license).  

That doesn’t mean that Google can make Google Novels, store your private file for public consumption out of your control, and leave you screwed.  You never posted something into a public system, so the surviving license doesn’t extend out to such a service.

Go read the article, it’s pretty well written and it’s pretty scary at the same time. I will continue to use Dropbox for my cloud storage. It’s bad enough that Google reads everything I send/receive in Gmail.