Alma Whitten, Google's director of Privacy for Product and Engineering, said in a blog post that the changes are expected to go into effect March 1.
She added that Google is consolidating more than 60 of its privacy policies into one encompassing policy.
These moves may have privacy advocates in an uproar but they shouldn't come as a surprise to anyone who follows Google, noted several analysts.
"I think it's potentially a quite serious [privacy issue] given the fact that the policy describes Google's intent to coordinate information gathered across its large array of products, such as search, YouTube and Gmail," said Brad Shimmin, an analyst with Current Analysis. "This is a natural evolution of their business model, of course ... Sadly, the level of detail Google has amassed on its users should come as no surprise, given Google's business model for search and advertising, both of which aim to provide relevancy."
By amassing as much user information as possible, Google is strengthening its position in its competition for advertising dollars with Facebook.
"Assuming that this goes forward, and I think it probably will, at least for a while, there's a good chance that it will give Google a leg up on Facebook and other competitors," said Olds. "Targeted ads are much more effective than random ads, sometimes with orders of magnitude better response rates. That's gold for advertisers, and they'll pay much more to ensure that their messages appear on the screens of people who are much more likely to be in the market for their product."
Google's ability to combine data from users' searches and Gmail use allows the company to build a better understanding of what ads users would be interested in seeing.
However, Google's Bencuya said that if a user has not logged in to his Google account, through Gmail or Picasa for example, the company has no way to recognize him and can't associate the searches with his identity. That's not new. That's how it's always worked, he said.
Rob Enderle, an analyst with the Enderle Group, said for a company with Google's size and experience, he's surprised that executives didn't do a better job making this privacy announcement.
"They are aggregating a lot of data, which suggests they'll know more about you than any close friend, relative, or spouse will shortly," he said. "This does raise one of Google's critical weaknesses, however, and that is its inability to present changes in a favorable light. By disclosing as they did, they clearly scared folks half to death and they likely could have avoided some of this pain had they thought through the disclosure approach a bit more."
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