The updated policy and terms will come into effect for all Google users from March 1st 2012, although the changes are not likely to be obvious to your browsing experience - as all the work is going on behind the scenes - unless a spot-on search result makes you think "Yes this is exactly what I'm looking for - how did they know?
And the answer is they know because they are following your every move on their sites. Google suggest that if you don't like these changes then don't use Google, but they also list ways you can change certain settings relating to privacy in the preview of the new policy such as viewing and editing your ads preferences, using Google Dashboard to review and control information linked to your account, setting your browser to block cookies, and taking information out of some of Google's services.
It will be interesting to see how users respond to the changes, do people care enough about online monitoring to educate themselves about the changes? The changes could come and go largely unnoticed and uncontested, or perhaps there could be a repeat of the furore about privacy that surrounded Google Buzz - no doubt Google will be hoping for the former. But already there has been negative response to the changes, with The Guardian reporting that "Google could log browsing habits on YouTube or Google+ to sell targeted ads in Gmail or search."