The changes, which take effect March 1, will remove some of the legal hurdles Google Inc. faces in trying to link information across services from Gmail to YouTube to the Google Plus social network that replaced Buzz.
The company said the new system will give users more relevant search results and information, while helping advertisers find customers - especially on mobile devices.
For example, if you spend an hour on Google searching the Web for skateboards, the next time you log into YouTube, you might get recommendations for videos featuring Tony Hawk, along with ads for his merchandise and the nearest place to buy them.
"If you're signed into Google, we can do things like suggest search queries - or tailor your search results - based on the interests you've expressed in Google (Plus), Gmail and YouTube," the company says on a new overview page for its privacy policies. "We'll better understand (what) you're searching for and get you those results faster."
The changes follow the shutdown of Buzz last month. After its introduction less than two years ago, the social networking tool was ridiculed for exposing users' most-emailed contacts to other participants by default, inadvertently revealing some users' ongoing contact with ex-spouses and competitors.
Google has since made Plus the focal point of its challenge to Facebook's social network. In the first seven months since its debut, Plus has attracted more than 90 million users, according to Google. To promote Plus, Google recently began including recommendations about people and companies with Plus accounts in its search results. That change has provoked an outcry from critics who say Google is abusing its dominance in Internet search to drive more traffic to its own services.
Google and the Federal Trade Commission reached a settlement last year that forbids Google from misrepresenting how it uses personal information and from sharing an individual's data without prior approval. Google also agreed to biennial privacy audits for the next two decades.
Google said it talked to regulators about the upcoming privacy changes, which it will apply worldwide. An FTC spokeswoman declined to comment on the changes or say whether the agency was consulted.
Some critics saw Google as trying to beat regulators to the punch by setting a precedent before the FTC unveils its own framework for protecting online privacy.
Google, Facebook and other popular Internet services all want to learn as much as possible about their users so they can sell more advertising at higher rates to marketers looking to target people interested in specific products, such as golf clubs or skinny jeans.
Google says users who opt to see personalized ads are 37 percent more likely to respond to an ad than people who opt out of targeting.
The changes follow a rare letdown in revenue growth at Google's lucrative advertising network. Google's fourth-quarter earnings report last week showed the company's average revenue per click fell 8 percent from the previous year, despite robust growth in online shopping at the holidays.
Google shares, which have fallen 9 percent since the report, closed Tuesday at $580.93, down $4.59 for the day.
Ryan Calo, director for privacy at the Stanford Center for Internet and Society, said Google is trying to make its policy privacy transparent instead of bogging users down with pages of legalese; the new privacy policies run about 10,000 words, down from 68,000.
But he said the company must ensure that the ways it uses data help users without revealing sensitive information.
"If it creeps people out, then they need to be aware of that," he said.
Technology Writer Michael Liedtke in San Francisco contributed to this report.