According to Google’s blog, they have reluctantly agreed to ‘anonymize’ their search data after 9 months. This doesn’t mean they will lose the data of course – just that your IP address will not be attached to it after 9 months. Previously they held this information for up to 18 months, and used it to personalise everything from search results to advertising (your Google Reader history is also incorporated in this, but I haven’t worked out what that relationship is exactly).