Google behavioral targeting

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Quote:The system uses a cookie - a small piece of text that lives inside a web browser - to track users as they visit different websites that show ads through its AdSense program.

Users will be assigned to categories based on the content of the pages they visit.

Quote:"The cookie doesn't show up any personally identifiable information so that is why we think opt-out is the right way to go," said a Google spokesman.
Information on YouTube , such as the videos people have been watching, will "be factored into" the system, said the spokesman.

From: http://news.bbc.co.uk/2/hi/technology/7937201.stm