"Compared to what"
Compared to small, local custodians, running economic nodes.
Is this scenario better then current BTC / LN privacy? (It is)
It doesn't address Bitcoin privacy issues because it's not BTC or LN. It is however centralizing, which is bad for privacy in general.
It can be useful as an access token from a service, where the service rendered should be blinded from the actual payment, but it is not in and of itself good for payments.
What information do you see they would be gathering?
The frequency and aggregate of source/destination on the settlement layer (Bitcoin/LN).
onboarding 1B new users?
SQL