An interesting article Helping Bloggers get to the top talks about the various things Google looks at to decide how important your site is. One thing in particular caught my attention:
How would Google know "How do users behave while visiting your site?"?
If the site runs Google ads, then it's certainly possible that they could track someone through it, though I've never heard anything that says they do. Update 2009: they do track like that now, although you can "opt out" of that if you wish. If they do actually do that, it could help them display more appropriate ads in addition to helping determine site rank. It's also a bit of information that web site owners are interested in, although we can get the same data from our own logs. I wouldn't be surprised if Google offers to make that available to site owners someday. They already do provide some information from their on-site Google search links: your Adsense reports will show "Top queries data" for the visitors who used that search box.
Google is chary with surfing information, and perhaps rightfully so: there's a privacy line here that could be crossed very easily. As much as I'd like to know the entire surfing history of my visitors (or more realistically, a statistical breakdown of that), I doubt Google plans to offer that to me. Google is helpful in other ways; for example their Site Maps reports now include a "Stats" report (you have to "verify" your site first by putting a special empty html page on it) that reports site links they couldn't get to. That helps the web site owner fix broken links easily.
Again, I do not know if Google actually uses Adsense to track flow through our sites, but that certainly is implied by knowing how users behave, so it may very well be the case. If anyone has any links to information about this, please do let me know.
If you are concerned about being tracked, you may want to look at http://tor.eff.org/ and http://www.privoxy.org/. I don't use such things myself, but I do understand the concern some people have and don't think it's totally ridiculous. I do think it can be carried too far, though. For example, those two tools can also be used to provide "secret" webpages. While there may be countries where legitimate information might need to be hidden like that, I suspect most use is for less palatable sites that are perhaps criminal or near to it.
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