Google recently announced, in its blog, the next step in developing its Search Alogrithm. Search results will become more Geo Targeted towards the searcher, this is done by three important elements:
Location, which can always be found with a high degree of accuracy from a computers IP address. Search History, again this is pretty much fool proof even if a user switches their cookies off. Web History, which you have to be signed in and have personally enabled according to Google but which it can generally achieve accurately enough using the same principles used to generate data for the above two points.
It's no surprise Google have taken this step. Ultimately if you do a search to find a local curry house you don't want to see results from the other side of the world or even the next city an hour down the road. Google's goal, like Adam Lasnik says, is to provide more relevant results. First 'relevant to the query' but also relevant to the user.
Google's key next step is to plug in the abudance of information that social networks provide and do a similar result but on a much grander scale.
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