You could be clever and say “this policy means there is no privacy”, but it’s really just spelling out clearly what Google have been doing for a couple of years.
Basically they are watching what you do, and then trying to provide you with a better internet experience from their point of view.
If this kind of thing spooks you, enable Private Browsing on your web browser, should do the trick. Personally I like the customisation features – I get frustrated more when things like this don’t learn from what I do.
What do you think?