Google has changed the search scenario by introducing personalized search on bigger scale. The new service is automatically turned on for every user who signs up with a Google account (Gmail, AdSense, Google Analytics, Google Earth among others). The effect is that your search history is recorded over a period of time and the search results are refined in accordance with your previous preferences.
In fact, the moment you sign in you get enrolled into three additional services: Search History, Personalized Search and Personalized Homepage. The search history is maintained for across the board Google services, such as web, images, news, froogle, sponsored links, video, maps and music.
After the user information leak from AOL last year, not many are secure with the idea of search engines tracking their activities online. But the problem with Google service is that it is automatic. Many average users would not even know that they are being tracked.
However, the good thing is that the service comes with an option to opt out too. But without any prominent hyperlinks or directions on the page informing about the option, it is reserved for the better informed. You can opt out of any specific services, such as image or web search.
This service by Google has important consequences. First, for the user it might imply better results. But how trustworthy is that assumption? There will be a different set of algorithms in operation and we are yet to see how it operates. Then, it depends whether the user will actually benefit by being 'fed' with what the search engine considers to be fit for him. The extreme situation is one that resembles the Big Brother. How long can Google resist the temptation to monetize from such authority?
Second, the service in a way changes the universal ranking systems. Thus they have an impact on the search engine optimization industry. Previously, the different data centers did provide different results, but that a difference of micro miniscule. Now that every user will have rankings customized for him/her, what happens to SEO?
Danny Sullivan has more to say on the different effects this service will have at Search Engine Land.