On Google, IV

So my objective is to give a quick, untechnical summary of what happens when I Google something. From the assigned reading I've done and past impressions, this is what I can come up with. (I'm writing this before I read "What Google knows about you.")

1. I go to Google and type in something and search.

2. Google records my IP, retrieves my location, and gives me recommendations and ads based on my search and location.

3. Google sends that info to its vast database and then keeps it until the next time I search. This is done through cookies (I think)

4. I search again. Google remembers my info and tries to tailor that search more to my liking.

Is this correct, incorrect? Am I missing something? This process seems fairly innocent, which leads me to believe there could be other processes I'm overlooking.