I always understood that "incognito" meant that it simply compartmentalized the session from the main browser so what you viewed there wasn't stored in the browser to affect the main session. Kind of like a "clears all data when closed" add-on. I never once assumed google wasn't looking. The page explicitly says that your activity may still be visible. Anyone who assumed that no one was looking or could see anything didn't read the warning on the incognito page.