Wow, makes me not want to use their services! Although I guarentee most search engines are doing, and have been doing this for a while.
.........Big Brother Is Watching..........
This is actually nothing new. Google has been tracking your information basically since they started. Youtube, maps, email, calendars... it keeps track of you in all of those (if you are logged in, you can see the data they have on you here: https://www.google.com/dashboard/).
You should be sure to use private/incognito mode on your browser for your more illicit endeavors online.