It seems to me he's talking about web applications and not cloud computing, which is not entirely the same thing, but nevertheless the sad thing about it is the fact that...
...he's right. Well, partially.
Yup, it's not smart to use Gmail. Adam discussed the problem of being addicted to Google's apps and services length in the past. From a privacy point of view, it's not smart to leave your personal data on Facebook, either. It's definitely not smart to do your business online on a bunch of free apps which perhaps don't really guarantee that your data is safe or - which is a much bigger problem in the startup world today - that they will exist in a year or two.
The problem, however, is that Stallman doesn't realize that some web apps are not easily replicable as desktop open source applications. Give me an open source desktop version of Facebook, and I'll use it, but it simply doesn't exist. It's a common error; many IT geeks and diehards are used to using a relatively limited set of applications and something along the lines of MySpace or perhaps Netvibes seems like a toy or a complete waste of time. Well, it isn't: these apps are used by millions and mose of them wouldn't trade it for the world, and like it or not, there's simply no open source alternative.
Furthermore, not all web applications are created equal. For example, I regularly backup all my feeds in Netvibes into a nifty OPML file. If Netvibes ever goes out of business or turns into crap, I have pretty much all the data I need and I can easily move to another, similar service. I don't really feel like the folks over at Netvibes are keeping me hostage; not more than any open source, desktop application could do.