Google has now begun saving and integrating all information relating to one individual, on its online services. This means that if you use several services owned by Google all this information would be consolidated.
Google has also begun saving all internet searches (=web searches) run from its browser. So if a person logged in to their gmail account (or other Google account) and ran internet searches without logging out of their account(s), this search information would be saved by Google.
Eventually all this information can be used to create a pretty accurate picture of an individual: approximate age, gender, probable ethnicity, profession, hobbies, sexual orientation, etc.The aim in collecting this information would be to sell it to third parties.
I do not think Google should have this information, personally.
Here is a link giving details on one way to turn off a good part of this:
http://www.vancouversun.com/technology/Want+delete+search+data+Follow+these+steps/6265757/story.html.