That's completely untrue. Advertisers come to Google and say "we want to sell this, people in these demographics would like it" and Google shows it to me or you based on what it knows about us.
Google knows lots about me; people who buy adwords don't.
They know that every person who clicks on their add is within the demographic profile they targeted. They do, indirectly, buy that information - and there's no way to operate Google's business model without that remaining true.
Google does help them (google's advertisers) to track you indirectly. Not throught the adwords networks but throught the RTB network (DoubleClick).
You can easily validate this by checking all the "pixels" (in the RTB sense) that are being deployed by Google. In their defense, they do mask a lot of things so stuff like the full IP address are not available (last time I worked on that they just give you the three first segments) but still quite a few information was available to target your demographic segment.
Tracking pixels are pretty standard for the web analytics industry, and are a tool to aggregate information, not sell. Google, Facebook, Optimizely, Marketo, etc. all use them.
Google knows lots about me; people who buy adwords don't.