I have serious doubts about the validity of this article. What they are talking about would be extremely difficult even after they deal with the huge spike in bandwidth. Consider the pitch about tailoring ads to what TV show you are watching. At any given time in America alone there are thousands of TV stations each with different programming (local markets with different advertising, time delay, hundreds of cable channels etc.). Next, each room will have different acoustics causing changes in tone and echoes. Next there is other noise to consider: conversations, firetrucks driving by, the neighbors, TV in another room (in college my roommate would watch TV and listen to musics simultaneously). And then there is the quality of microphones in computers. To be able to listen to all that through a laptop microphone and say "yes, he is watching Survivor" is so unlikely as to be laughable.
The amount of ad revenue Google could make off this is small compared to the cost. They would have to keep data banks with a recording of every show, song and movie in their entirety. And they would need massive processing power to continuously analyze each person's stream and compare it to that entire databank. Not to mention for live TV (first airing of shows, sports, news, talk shows, game shows) they would have to stream, analyze and record it on the fly.
Even saying they will cue off of phrases and words is stretching things. Say I am watching CSI and someone gets murdered in a car. Does that mean I would want to see ads about buying a new car? Not to mention that speech to text software is still not very good and would mess up both words and sentence context (other things that could easily lead to cars... cartoon, carpet, (James) Carville, (Dana) Carvey, The Cars). Would advertisers spend more money to have that increase in accuracy of their ads? Not to mention the porn ads you woud get inundated with after watching a ganster movie that says "f***" alot.
Fears about the NSA or someone doing this are somewhat founded, but it's not like it is a threat today that wasn't there yesterday. Unless you are unlucky enough to get caught in a CIA secret prison with no trial, no evidence could be used without a warrant. Besides, if they were interested in you they could plant bugs anyway, so they don't need this.