The logical end point, if you think it through, is scary for technology. There will be a battle for a time where legislators play cat and mouse with technology and privacy companies. But as each new hole appears, they'll invent new laws to close them off. This wouldn't be so bad except for the problem that encryption is math and short of making math illegal there will always be a hole. Factor in steganography and it…
I think what will prevent the above from happening is inability of government to enforce laws on the books, people disregard for those laws and the fact that technology experiments are often positive sums games where Google, Microsoft and Oracle stand to lose more by blocking entry to small players through regulatory mechanisms.
If we look at the majority of tech law suites we can easily observe that there is no clear winner and either parties seem to have achieved only small term gains.
But I most certainly see that government will successfully kill innovation when it comes to heavily regulated industries such as education, drugs, medicine and biotech.