I have not fully looked into this, but it has received good reviews (including one from Siva Vaidhyanathan of Sivacracy). Yes, you can alter your Google cookie so that you are anonymous to Google, rather than it tracking "your ever move" (okay...those are my words). This page also contains tips for getting Google to know less about you, even if you don't anonymize your cookie.
P.S. -- Siva is moving his blog, named Sivacracy, to a new server. If you're into "new media", culture and copyright, his blog may be one you'll want to follow.
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