"With infinite storage, we can house all user files, including: emails, web history, pictures, bookmarks, etc and make it accessible from anywhere (any device, any platform, etc)." (From a Google presentation)
Google's plans for using personalization to improve search results could face some difficulties. Google already uses your queries, the results you click on, your bookmarks, but this isn't enough to build a comprehensive profile. People don't search too many times and, most often, they click on the top search results.
So I think the next step in Google's efforts to tailor the search results to your preferences is to expand the search history into something more complex: the web history. Browsing web pages is an important part of your online activity and there are already applications like Google Desktop that monitor and index the visited web pages.
A web history service could be easily implemented in the toolbar. If you enable PageRank in Google Toolbar, you send each page you visit to Google, but they are logged anonymously. Now these web pages would be connected to a Google account. Unlike the solution implemented in Google Desktop, this service would use the information from Google's index and wouldn't need local storage. It would also extend the history feature from most browsers, which is severely limited in time.
You'll be able to tell if you visited a page in the past, how many times and what was the context. Some clever algorithms could extract patterns and could recommend you similar pages you wouldn't have discovered otherwise.
Of course, a such a service would cause a big debate regarding privacy and trust, so it will be disabled by default.
Google says in a patent application filed last year: "Search engines typically provide a source of indexed documents from the Internet (or an intranet) that can be rapidly scanned in response to a search query submitted by a user. As the number of documents accessible via the Internet grows, the number of documents that match a particular query may also increase. However, not every document matching the query is likely to be equally important from the user's perspective. (...) Over time, a user will have executed a history of search queries, results which were examined, advertisements that were clicked on, and other various browsing activities which reflect the user's preferences and interests. Oftentimes a user may be interested in examining the user's such prior activities. It would be desirable to permit the user to use the prior activities to enhance the user's searching and browsing experience."
