Despite the insanely embarrassing situation that AOL is currently facing, Google has decided that they will continue to store search data that comes through their servers. While the data can prove to be invaluable for market researchers and advertising purposes and thus very important to a company like Google, one must wonder if it is only a “matter of time” before they end up leaking data. To their credit, Google fought and won in court over having to release search data. AOL, on the other hand, rolled right over. There are those who are much more worried about Government actions than intentional or accidental links or other misuse:

Schmidt said he is less concerned about those possibilities than the governments of countries around the world demanding to review people's search requests. "I have always worried the query stream is a fertile ground for governments to snoop on the people."
Assuming a company sticks to its grounds, Schmidt is probably right. Google is in a sticky position for sure. Let's hope they are responsible.