Oh shit! The government knows I bought something from custom-fishing-lures.com! Ruuuuun!
Seriously, what you just listed is a reason not to use the government's Oauth for every website and ban all other implementations. What OP seemed to say, and what I disputed, is the idea that this service should not ever be used by any private website even as one of several options.
The state exists as the means for ensuring positive societal outcomes, such as providing services that the private competitive market cannot or will not supply (tragedy of the commons, game theory, etc). One such possible service is an identity service - and we already have that through a hodge-podge of things like SSN, driving licenses, passports, etc. A consolidation of these services means greater efficiency, less waste, and therefore lower taxes.
I'd respect the libertarian position more if it were framed as "greater utility of government" instead of the dogmatic "less government".
This is the moral basis for outcomes like, snuffing out a person for selling loose cigarettes. In the end, the privileged get away with infractions that hurt people en masse, and the disposessed get punished for offending the sensibilities of those who get to define "positivity" on behalf of society.
I'd respect the state position more if there were well defined metrics for "greater utility" and a stronger non self regulating mechanism for accountability, instead of the dogmatic principle that voting constitutes consent.
The US does not have legally-mandated job-protected leave for pre-trial detention, people have been terminated (for cause, and so not eligible for unemployment, either) for missing one day of work due to an arrest for which no charges were ever filed.
BTW in case anyone thinks it was a ridiculously contrived example, I was just trying to illustrate that what one person thinks is totally innocuous can appear damning to someone else.