Full disclosure: I'm a Google employee, but not in the areas mentioned in the article. This is my personal opinion.
Regarding the Nest thing: I don't think those devices stop working completely if you don't enable location sharing for the "home and away" feature. It might be bad UI that made the user think that this is the case?
Regarding photo sharing: I think that permission is necessary to show a "photo picker" inside the app that allows the user to pick and choose which photos to upload. I'm not quite sure what the alternative would look like: "he can identify specific pictures in his library and grant access to just those" --> How exactly would that work without the app having access to the pictures? Also, does the author believe the app would then secretly analyze all pictures and send content back to the mothership without the user's consent? Again, this might be a communication/UX issue...
If the goal is to emulate human behavior, I'd say there is a case to be made to build for the same interface, and not rely on separate APIs that may or may not reflect the same information as a user sees.
IIUC the EU basically had to force banks to implement this via a mandate. I don't see "business friendly" US lawmakers doing the same anytime soon. The joys of the Free market™!