I can imagine a reasonable user who doesn’t look into it beyond the old warning text being aware that incognito’s purpose is to not store browsing history and therefore assuming that somehow impacts Google’s ability to know where you’ve been. Like, they might know it doesn’t stop trackers but assume not having the history logged means it’s not there for Google to take. Or speaking more generally, they could’ve taken it to mean “we won’t track you, but we can’t do anything about others doing so.”

I wouldn’t say it just relied on basic reading abilities, as you could easily be misled if your mental model for how tracking and data collection works was just a bit off.