Google denies ownership of users' words
The controversy centers on Google's use of the word "public" in its terms and conditions for Google Docs.
One clause states, "By submitting, posting or displaying Content on or through Google services which are intended to be available to the members of the public, you grant Google a worldwide, nonexclusive, royalty-free license to reproduce, adapt, modify, publish and distribute such content on Google services for the purpose of displaying, distributing and promoting Google services."
It seems as though the word "public" in that sentence refers to the Google Apps themselves, not the actual words or documents (Content) generated through those Apps. Clarity is always good however, and it's easy to see how confusion could reign.