Microsoft has joined with Ask.com in leading the search and advertising industry to adopt standard privacy principles for search history and click stream data. Google and DoubleClick store search queries and click stream histories on every user...in effort to serve up better search results and advertisements. Google has recently agreed to "anonymize" its search log data after two years.
Microsoft will make search query data anonymous after 18 months by permanently removing cookie IDs, the entire IP address and other identifiers from search terms. Microsoft will also work to give customers more control over what information it uses to personalize their online search experience. In connection with its efforts to support a common industry approach to privacy issues, Microsoft also announced that it will join the Network Advertising Initiative (NAI) later this year when it begins to offer third-party ad serving broadly.
Standards of use are needed to make consumers feel comfortable using any search engine, or clicking on any advertisement. As it stands today each search engine and advertising network makes up their own data retention and privacy rules...and they are all different.
What about the government and lawsuit discovery? Personally I feel reasonably comfortable that all the search engines will use my search histories in a reasonable way. I am more concerned about the government monitoring activity and lawyers digging deep in "discovery" on lawsuits, divorces, and both criminal and civil matters. If the search engines have the data the courts can force them to give it up...regardless of their stated privacy policies. The courts can over rule any company policy.
The simple answer is for the search engines and advertising networks to "anonymize" all data they keep, and to delete data after two years. The government and lawyers can't access what doesn't exist. Agreeing to privacy standards and data retention policies will make it safer for everyone to use the Internet.