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I have the suspicion that Google user tracking is not just for better advertising. Their original page rank algorithm is a random walk on the web graph, every user similarly performs some walk on this graph, in principle it should be possible to use that walk to improve the relevance ranking. This is just one example, there are many others how user interaction could be used as feedback into the search engine.

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It does reduce your view of what's out there to some extent, giving seemingly undue bias to certain services or opinions.

Google does indeed use my data in order to personalize search results. I remember being impressed to see that for a query that could have several different meanings, the search engine gave me results centered on my engineering field, which was what I was looking for. I am not that convinced that it blindfolds you to some services or opinions though. So far I have only seen differences in understanding the context of the query, which I don't see as an 'undue bias' but an added value (especially if you read the anecdote about the 'history of aviation' query in this thread).

Some other thoughts on the bubble : http://www.blindfiveyearold.com/the-preference-bubble .

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