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I have heard about this,I like to use duckduckgo or 4loot (plz use my referral code to check it out wink ) http://www.4loot.com/?id=23766&src=em (also for 4loot,if you search stuff,you can get coins,and then later when you get enough trade the coins in for facebook cash to use on the games there (facebook like happy pets,farmville,all those games) its pretty sweet)

Seconding Moth Feathers and also adding, if you have a gmail account and are signed into it when you search something, Google records it. You can opt out of it -- I don't recall how right now, it's been ages since I bothered.
Also, you can just sign in using your browser's "Private Browsing" mode. There's also various programs you can download and/or buy that will help uphold your anonymity. Tor, for instance, as well as various VPN programs, Proxy sites, and in Firefox, several add-ons that ensure your personal privacy.
But, you can use all of these features to the best of their ability and still have an information leak. It all comes down to being careful what you put out there on the internet. It should be obvious, but in case someone just crawled out of their cave and found a computer connected to the internet, don't put your full name, social security number, birthdate, credit card/bank numbers, address, etc. out there where just anyone can find it. If you use Facebook, review your privacy settings; on Gaia, don't go into the chatterbox and say "Hey, my full home address is this, send me something! biggrin DD" (I've seriously seen that done. >.>). The list could go on for days.

Thirding Moth and seconding Jiti. Browsers are the gates to the internet. Search engines are the tour guides of the internet.

I Googled the issue, lulz, and came up with the site Google-Watch.org. The info there matched the concerns stated here. They make themselves out to be conspiracy theorists, to be quite honest. If I wanted to hear conspiracy theories, I'd talk to my father-in-law-to-be. This isn't Skynet we're talking about here.
There's not really anything to fear from Google, IMHO. Don't want your history tracked? Use Incognito mode (Chrome) or the respective privacy modes of the other browsers.

Browsers don't give computers viruses. Sites do. Or ads, banners, and embeds on sites. Or phished emails. Among other things.
Point is, don't blame your browser. It didn't do anything but permit you on the internet, like it's supposed to do. Viruses and their makers find new ways to circumvent antivirus programs all the time. That's why it pays to stay updated, and to go for antivirus programs that aren't McAfee, Norton, or TrendMicro. AVG, Avast!, and Comodo are all reliable, and have free versions that do the job pretty well.

But if you insist on not using Google, there are plenty of others out there. Opera, Firefox, Maxthon, Safari (Mac), Konqueror... Wiki has a list. Just anything but IE if you can help it. IE sucks, like most defaults tend to do. They do the job, but they're mediocre at best. And anymore, I find Firefox to be slow. On the same internet connection, Chrome will pull up a page so much faster than Firefox. I like that. Chrome is lower-profile and sleeker, too.

I've been using Google Chrome for a few years now (since its release), in tandem with AdBlocker (recent two years) and AVG Free Antivirus (since I built my machine, about 4-5 years ago). No virus to be seen but one during the entire 4-5 year span, and it was a weak little Trojan or similar that didn't do any damage, and had snuck onto my machine despite my having TrendMicro installed instead of AVG; just slowed my poor obsolete machine down. (And that is why I advocate AVG over the big companies. TrendMicro didn't catch the bugger. AVG did.) I was upgrading operating systems to Win7 at the time, anyway. *knocks on wood* Had to downgrade back to XP to conserve RAM.

The trick is to know your computer and your programs. You can't lose anything by knowing, but you can certainly pay the price by remaining naive.

Bing collects your search terms too, as do like all other engines I think.
Information is valuable, especially when companies like Google can provide advertising and stuff.
I am largely unconcerned though, who cares what I search? I'm just another statistic to them.
Bing privacy policy
Google privacy policy
Note how they both specify that yes your data is recorded and used in part to better their results listing.
Nobody's going to sue, Google's been doing this forever and I'm pretty sure it's quite legal.
(often times their legal papers say that your use of their service constitutes acceptance of terms)
They never say that they won't record your information, as their privacy policy shows.
And like other users say it's not really harmful to you, especially under normal use.

Oh, and Chrome itself will not cause viruses.
I use Avast! AV, which is free, but I hear good things about NOD32 n_n
I've been using Chrome for going on two years virus-free. It's nice, I like my browsers simple.

You should really get an anti-virus, MBAM and Spybot aren't substitutes for one.
MBAM, for example, has no real-time scanning (unless you get the paid version, which I assume you don't). It's not an anti-virus, it's just a malware scanner. I have it too, it's a good program, but isn't an antivirus and can't take the place of one.
Spybot isn't an antivirus either, it's just a malware scanner/remover type of thing. It helps but it doesn't perform the same functions as an antivirus and isn't a substitute for one.

It's like...those programs are good additions to an antivirus, but again, don't take the place of one. You know how Windows computers come with Windows Defender? Defender scans and such, but it isn't a replacement for an antivirus, just a helpful addition. Or like, firewalls for instance. They don't take the place of a good AV.

There's tons of free anti-viruses. I use Avast myself, and love it, but there are others (Avira, AVG, Microsoft Security Essentials, lots and lots).
Having a good anti-virus will really give you the protection you need, as right now what you're doing is pretty much the equivalent of surfing the internet unprotected. xD On my old computer, all I had was Malwarebytes (my computer was SO outdated (windows xp service pack 1) that I couldn't download /any/ antivirus) and after a month of having MBAM as my sole 'virus protection', I got nailed by Windows Recovery Virus (and I use no-script and adblock in Firefox, and only visit trusted sites, so...yeah). MBAM cleared it up but I would have prevented the whole 9 yards if I just had an actual antivirus.