[nl]

How does this do anything about pervasive NSA spying?

Google clearly suspects the NSA is installing devices on the leased lines they use for inter-datacenter communications.

Properly implemented, this will stop that.

The NSA has broken SSL and VPNs by corrupting the CAs and the VPN vendors.

I suspect Google won't use a commercial VPN implementation. Corrupted CAs can be bypassed by using self-signed certificates, which will be fine for communication within the same company.

[hannibal5]

Google don't have suspect anymore. The first documents Snowden published show that they are doing this.

PRISM program is for collecting intelligence within and with companies that have joined the program (including Google). Upstream is program is for collecting data directly from fiber. Analysts are free to use both.