I assume they do use your search history for some purposes. For instance I have been enrolled inside the Foo Bar challenge from Google, and from my deductions it is thanks to my search history (mainly programming-related). The Foo Bar challenge is a suite of tricky programming questions and in the end, some of the winners of the challenge receive a message from Google's recruiting team (as I did) where it can lead to a job at Google.

This is only my deductions from my experiences with Foo Bar, it might only be in that case, I am not exactly sure, but you should assume they do.