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CustomizeGoogle helps eliminate some of those privacy concerns people are beginning to have regarding Google and the information it collects about you and what you search for. One of Google's biggest tracking tools is a user ID hidden inside of a cookie. You can delete the cookie, of course, but that also deletes all the user preferences, and that isn't good. Instead, CustomizeGoogle tweaks the cookie to change the user ID embedded inside of it. That way, all of your settings stay intact, Gmail and iGoogle work just fine, but Google's database keeps tracking "new users" instead of you. I've never had a single problem with Google's services while using this feature, and I push Google's apps as far as they will go.
Another area CustomizeGoogle helps with privacy is by preventing your cookies from other websites from being sent to Google. As a web designer and site owner, I (and millions of others) use Google Analytics to help track what users do on my site. Don't worry, its mostly harmless, but it allows a site owner to see things like which pages cause users to stick around, and which ones cause them to click away. The catch is that the same cookies that give the site owner that information can be sent to Google as well even they don't have anything to do with the site. CustomizeGoogle stops this as well.