Google is like Big Brother in 1984. They know practically everything you do online, can scan your HDD to find what programs you use regularly, what sites you visit, how you talk, and for some of us, even run our browser. I am not completely sure, but i think they will turn in people to the FBI or CIA if you search for stupid crap like IMing a Terrorist, or other keywords, like floor plans to the local high school.
It is extremely hard to do anything on the net that someone don't find out about.