Yes, but it wasn't just about Google Reader. A number of things happened (or hit the news) in a short period of time, all of which damaged Google's standing as the "Don't Be Evil Company" and hurt their credibility with hackers and people who care about things like the Open Web and Open Standards.

I'm not necessarily saying the backlash was (or wasn't) justified, but it was what it was, and I think this step by Google is a good thing in terms of earning them a bit more trust with that crowd. Whether that's something that actively care about, is anybody's guess.