Perhaps I am under the wrong impression, but I thought that my password encrypted all of my sensitive data on a website. Let's take Gmail as an example. What I would hope, is that without my password, nobody could view my emails. Not Gmail, and not the NSA. But if this is the case, how does Google know so much about me? How do they have access to the information stored in my email?
Edit:
The reason I was under this impression is for security rather than privacy; if a database is leaked, or an employee is not trustworthy, there goes all of my information...