Tuesday, 1 April 2014

Why Gmail and other e-mail services aren't really free "Nothing in life is free"

We may take it for granted now, but email has changed the way we interact with one another. Ten years ago Google launched Gmail, a free web-based email service (at first invite-only) that has grown into the world's most-used. Here's a retro-flavored look at 10 innovations Gmail has led since its April 1, 2004, launch.Gmail doesn't cost any money to use, but it's not free.

Google's popular online e-mail service, which turns 10 Tuesday, may not charge for its Gmail accounts. But the company is still collecting payment in the form of massive amounts of personal information about the people who use it.
With an estimated 500-plus million users, Gmail has grown to dominate the Web-mail world. It has also repeatedly found itself in hot water over privacy. Gmail is facing multiple privacy lawsuits in the United States and Europe, some accusing the company of illegal wiretapping for scanning the content of e-mails.
Google reported $16.86 billion in revenues for the last quarter of 2013 alone. One way it makes money from Gmail is by automatically scanning and indexing messages and using the data it mines to show relevant ads to its users.

Scanning and ads
Gmail looks for keywords that identify topics of discussion based on things such as frequency and context, then matches the e-mail up with related ads. A conversation thread about meeting up at a spinning class, for example, might trigger an ad for a weight-loss product.

Data gathered through e-mail scanning can also be used to create user profiles for future ad targeting.What many consumers don't consider is that companies such as Google can create a comprehensive profile of each user based on information from different products such as search, maps, e-mail and Google+, its social network.

"Nothing in life is free, and as a result it is important for people to understand what value they bring to a free service of any kind," saidBehnam Dayanim, a partner at the law firm Paul Hastings LLP in Washington.

When people send and receive messages using a free e-mail service, they are sharing details about their interests, who their connections are and what their finances look like. That information might seem mundane on the surface, but when extracted and organized, it's incredibly valuable to marketers and advertisers.

All the major e-mail providers, including Microsoft Outlook and Yahoo, benefit one way or another from offering a free service. The provider might serve up general or targeted ads, generate a user base for marketing other services, or just use the e-mail service to build brand recognition.

And while Gmail may have popularized it, targeted ads based on user data has become the primary business model for many tech companies. It's how social media companies such as Facebook and search engines such as Bing make money as well as a huge number of apps that scrape contact and location information from users. It's also led to a number of similar privacy lawsuits against other companies, including LinkedIn, Yahoo and Facebook.

Any company that collects personal information has to advise its customers what it is doing with their information and comply with any relevant privacy laws, Dayanim said. These are usually laid out in the lengthy terms and conditions and privacy policies that customers barely skim before hitting "agree."However, many of the details about how exactly Google's program works have been kept confidential. And critics say the service doesn't adequately disclose what it is doing with customers' information.

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