It is down to the politicians to sort out the legislation, but there still is a PR aspect here and Google just failed at it.
Starbucks were also criticised about their tax spend and came out promising to pay more tax - and they still got slammed for it. Ended up showing weaks sales for the quarter in comparison to Costa.
That, however, shows how the public feel about it - making some effort to vote with their money. That approach doesn't really work with Google though, does it? That would need businesses to not spend their money with Google and I can't see that happening anytime soon.
The market is crying out for some decent competition - Bing, FB and Linkedin combined can barely compete with Google in terms of ad spend in a lot of markets. And I would fully expect analytics to move to a paid model next year, there are loads of changes coming out (Google wants your offline customer data, not just the online stuff...).
Politicians may make the rules, but SEOs have handed a lot of the market(s) to Google on a plate by jumping all over Adwords, Adsense, Analytics, Gmail and so on.