If it's illegal, I suspect it's only indirectly so, by some roundabout after-the-fact fair-trade-practice or antitrust analysis, based on Google's dominance of search advertising. Which means: very arguable and not much of an up-front deterrent for a motivated competitor.

In their privacy policies – which concern 'personal information' with far more legal sensitivity than aggregate ad/transactional data – Google pretty much grants themselves carte blanche to "combine the information you submit under your account with information from other Google services or third parties in order to provide you with a better experience and to improve the quality of our services" and/or "Provide, maintain, protect, and improve our services (including advertising services) and develop new services".