I do respect Google for pulling out - this was actually the last time Google actually really tried to "don't be evil". Since then, they've thrown that overboard. But that one time, they did it.
The problem is that the outcome was worse than remaining there. That was a lack of wisdom on Google's part.
Apple could pull out, lose Billions of dollars and a hundred million users, Chinese wouldn't be able to get their hands on iPhones, and Samsung, Meizu, Huawei, and so on would be having a field day selling their government-approved devices, which, in terms of privacy, are infinitely worse than iPhones.
Apple is actually implementing some pretty serious privacy features, like end to end encryption in iMessage and so on.