At a roundtable lunch with reporters, Google’s CEO Eric Schmidt remarked that he “expects advertising will be the growth engine of Google for a very long time,” noting specifically that “Google ads are very targetable, because Google knows a lot about the person surfing, especially if they have used personal search or logged into a service such as Gmail.”
Google. knows. a lot. about. you.
BTW, the original scholarly paper by Google founders Sergey Brin and Larry Page warned of the dangers of advertising-based web search systems:
Currently, the predominant business model for commercial search engines is advertising. The goals of the advertising business model do not always correspond to providing quality search to users. … [Given] historical experience with other media … we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers … [W]e believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm. [emphasis added]
Apparently, this is no longer a concern…