The privacy row first arose in 2010, when people realised that Google's then-kinda-new StreetView photo-collection-mobiles were collecting the names, MAC addresses and locations of WiFi access points in homes and businesses.
I might be wrong, but I think that the big problem was not collecting the MAC addresses and locations of WiFi routers. It was that they were also recording whatever data was being sent over the networks.
Google was recording the locations of routers to make it easier for Android phones to find out where they are when they detect the same WiFi network, and this is something relatively uncontroversial which iPhones also do.
But they had no particular reason to record the data sent over the network, they didn't even know what to do with it, and it seems that they recorded it just because why not. That's the part that got them in trouble.