Google released plug-ins for Internet Explorer 7+, Firefox 3.5+ and Chrome 4+ that disable Google Analytics tracking. Google Analytics is by far the most popular free service for getting statistics about the visitors of a site and it's used by a lot of sites, including this blog. Even if the service doesn't show personal information about the visitors and it only provides aggregated data, some people are concerned that Google can track the sites they visit using a seemingly innocuous Google Analytics script.
Google explains that Google Analytics uses first-party cookies to track visitor interactions, so the data can't be aggregated for all the domains. "The Google Analytics Terms of Service, which all analytics customers must adhere to, prohibits the tracking or collection of [personal] information using Google Analytics or associating personal information with web analytics information."
Those that are concerned about their privacy can install an add-on and permanently disable the script. After installing the add-on, you'll notice that the browser still sends a request for this file: http://www.google-analytics.com/ga.js when visiting a page that uses Google Analytics, but it no longer sends information to Google Analytics.
If a lot of users install the add-on, website owners will no longer have accurate stats, they'll no longer be able to find if their content is popular and what sections of their site still need some work. Even if Google didn't release opt-out add-ons, users could still block Google Analytics by adding an entry to the HOSTS file, but the add-ons make it easier to opt-out.
Google also added a feature for website owners: Google Analytics can now hide the last octet of the IP address before storing it. "Google Analytics uses the IP address of website visitors to provide general geographic reporting. Website owners can now choose to have Google Analytics store and use only a portion of this IP address for geographic reports. Keep in mind, that using this functionality will somewhat reduce the accuracy of geographic data in your Analytics reports. "