Google has announced a few new steps aimed at improving user privacy. While previously, Google stored search data, such as search query and IP addresses for an indefinite period, a new policy will be effective from now on. In a post at the Google blog, it has been said that:
Unless we're legally required to retain log data for longer, we will anonymize our server logs after a limited period of time. When we implement this policy change in the coming months, we will continue to keep server log data (so that we can improve Google's services and protect them from security and other abuses)—but will make this data much more anonymous, so that it can no longer be identified with individual users, after 18-24 months.
However, users can still prefer to have their data store for longer than the 18-24 months period. Google has also release a log retention FAQ (pdf) for further clarifications.