Check out this important article in Wired. While Google still offers a variety of privacy settings, this effort to use a person’s search history to target ads is more than a little worrisome.
MEDIA AND MAYHEM
Musings on the Crowded, Contentious Terrain of Media, Violence, and Culture
MEDIA AND MAYHEM 
The scary part is that Google has been already gathering information on people through GMail, and Google Chrome. Their nicely written elusive User Agreements allows Google to collect data on your Internet search inquiries from Google Chrome, as well as putting privacy issue with e-mail to the new level with their GMail service’s eves dropping.
The worrying part is that most people are aware of these things and allow it to continue. People need to understand that they can let Google know that they don’t appreciate these things, by stopping using their products. They will surely notice this quickly, if they will lose their consumers and in effect the advertisers. They will quickly respond to the market shift.
It is the consumers who can in great measure force a change. If people just bend their backs over this and don’t see a problem, then we’ve got a problem.
Now on a humorous side, it seems that the far fetched jokes about Google’s Skynet like ambitions might not be as crazy as we think.