I think that Schmidt is right, to a point, but may be over-dramatizing quite a few things, and seems to be slightly hypocritical since Google has taken liberties with people's online identities in the past (i.e., linking Gmail and Buzz accounts without permission) and probably will in the future. Especially since the rumored "Google.Me" product is another Google attempt to enter the social media network (after the less than successful attempts of Orkut and Buzz.)
Schmidt also has a pie-in-the-sky view of what Google will eventually become. I found this quote to be a little cocky when Schmidt said "I don't believe society understands what happens when everything is available, knowable and recorded by everyone all the time... I mean we really have to think about these things as a society."
Schmidt really believes that Google will create a search engine that makes everything available, knowable and recorded by everyone all the time??? Sounds to me like someone has a God-Complex if he thinks that Google is going to eventually be omnipotent. Google's good... but it's no God.
As for the topic of people eventually having to change their real identity to escape their online presence, it seems that many are turning that concept on its head through the creation of fake online ids in order to protect their real identities. The BBC blog asked its readers "Are you ashamed of your online past?" Most of the answers were "of course I am... that's why I use a pseudonym and a cute little avatar." Perhaps that is working for the time being, but perhaps Schmidt and
My words of wisdom: "Don't put anything on the Internet that you wouldn't read out loud in front of your Grandmother, in Church, on Sunday morning -- or to your boss on Monday morning."