In case you haven't checked out just yet as to how it affects your use of the Google Web products, here's the round-up of the changes and the how-to for cleaning out your search history.
On March 1st, 2012, Google tidied up the utter chaos that had reigned in its Privacy agreement. Earlier, each of Google's services used to have its own separate Privacy agreement. It meant that, in effect, if you were a privacy-concerned person and wanted to know for sure how your personal data were treated by Google Inc., you had to read each and every of these agreements, written in obscure legal language.
After the watershed of March 1, there is only one Privacy agreement for all Google services. More importantly, it is written in plain language and is supplied with videos and pictures that nicely illustrate the text.
Of course, Google doesn't want to be accused of mishandling the personal data we share with it. If you want to make sure your privacy is protected in the most effective way possible, Google always gives you a chance to tune sharing of your data the way you want and even delete the entire history of all of your previous searches.
1. Google Account Options
If you are an owner of a Google account, you can always manage your privacy settings with Google Dashboard. This page gives you an overview of nearly all of Google's services associated with your account, along with the direct access to privacy management options.
Another important feature based on using your personal information is Web History. It is essentially the history of all search queries you'd made using Google since registering the account. The search algorithms use it to take into consideration your previous queries, as it allows for optimization and personalization of your future search results.
For example, if you click on some search result for a jerky meat selling company and later search for 'snacks', in practice, Google will use your Web History entries to jump to the conclusion that you're more likely to be more interested in jerky meat than in the other kinds of snacks.
If you don't want the information about your queries to be collected on your account, just click 'Remove All Web History' and the 'Pause'. From now on no new entries will appear here.
2. Privacy Outside of a Google Account
Your personal data are collected by Google even if you don't have any Google Account. In that case it happens in the form of the so-called search logs. i.e. data entries containing information about your IP-address, browser, operating system, search query, and your computer cookies (small text files stored on your computer when you visit a web-site). This information is then used for personalization of your search results.
To prevent Google from collecting this data is a bit tricky. First, there is no way to hide you IP-address except for using anonymous proxy-servers (you can read about it in more detail here). Second, if you configure your browser in such a way that no cookies are saved on your computer, it will hamper your searches. At the end of the day, Google is so popular just because it helps you find what you need faster than its competition, and it does it by using your personal information. A more effective way of treating the problem would be actively managing your cookies. It means that in your browser you create a list of web-sites that can send you cookies. All other cookies will be automatically prohibited.
That's how you can define the list of web-sites you want to send you cookies in different web-browsers.
Chrome: Preferences → 'Under the Hood' → Content Settings button → opt-in for 'Block Third-Party Cookies' + Manage Exceptions
Firefox: Edit tab → Preferences → Privacy tab → 'Firefox will:' field → 'Use custom setting for history' → 'Accept cookies from sites' → Exceptions button
Opera: Preferences → General → Cookies → 'Ask me before accepting cookies'
Picture Credit: ~drnour; Lloyd Trufelman