I'm also European and I think almost pretty much 100% as you think on this, but to play devil's advocate, and how I think this should have worked in theory in a free-market economy, is that the US, by allowing companies like Google to do their nefarious and frankly evil things right now and in the near future is also, at the same time, not allowing future potential companies, more innovative than Google is now, to take Google's place.
But what happens is that the US is focusing on having a strong and national security-enhancing company (Google) on its side now and in the near future, versus having an even stronger and, potentially, even more national-security enhancing company (the one that would have taken Google's place had the free market been allowed to do its thing) in the medium to long future.
On the face of it this compromise of security now and in the near future vs security in the medium to long future looks like a decent bet, the problem is that evil colossuses like Google are actively getting rotten from the inside, and at some point in the medium to long future they'll fall almost in an instant, with no company to take their place. That will leave the US highly vulnerable at that point in the future.