Avoiding FOSS Web services for fear of helping proprietary vendors is a dangerous strategy. After all, both Google and Microsoft are definitely moving towards SaaS -- as cited in the article. With their enormous power in the marketplace, they could just make it without anyone's help. This would marginalize FOSS.
Also, rejecting something valuable because others may twist it to harmful ends is rarely a good idea. Should FOSS authors stop working on their projects, because new releases validate the general idea of upgrades, for which proprietary vendors charge money? For example, was adding USB support to Linux a mistake? Should we stop releasing security patches?
This line of reasoning leads to absolute paralysis. As discussed in the article, a free Web OS would help IT operations inside organizations, less experienced users, ISPs, etc. This makes it worthwhile. Someone willing to twist our good works to less than benevolent purpose would just pursue their nefarious goals anyway -- even if we do nothing.