anusha

When Google first launched Gmail there was a small outcry from privacy advocates about Google's plan to serve advertising based on the content of user's emails. Here is a snippet from an April 5, 2004 statement from the Electronic Frontier Foundation addressing the issue (emphasis mine):

As you've no doubt heard, Google's new Gmail beta email service is raising concerns (reg. req.) about privacy. How much concern? Well, let's just say that it's not often that a new email service is widely misinterpreted as an April Fool's joke.

The basic idea: Google will offer you a gigabyte's worth of email storage capacity -- by one count, up to 500 times that offered by its competitors. But it also plans to scan the contents of your email messages in order to display advertisements relevant to your online conversations.
That statement raised some eyebrows among non-techie tech reporters who envisioned cube farms of Google employees reading Gmail user's emails so they could serve relevant ads. Of course, that vision doesn't pass a reality test if for no other reason than it's simply not practical or economical to human-read emails in order to serve relevant ads based on their content.

Of course, that didn't stop a California State Senator from running with the issue:

According to Figueroa, it isn't customers who would like such a program - it's advertisers.

"This 'Faustian bargain' undermines the most fundamental aspect of communication - the expectation of privacy," Figueroa said.

"The proposal is little different from asking people to let their phone company listen in on their calls and butt in at any time to say, 'This call is brought to you by..."'

A month later, the rhetoric was turned down and logic turned up when the bill passed the CA Senate :

The bill formerly known as anti-Gmail has been approved by the California state Senate 28-4.

The bill would prevent email providers from building personally identifiable profiles by scanning emails and from sharing data with third parties, but it would explicitly permit advertising created in real-time by automated and mechanical analysis.

How does Google insert advertising into Gmail? The same way they serve AdSense ads onto newspaper, blog and forum sites. They automatically scan the content of the page - in this case the content is an email message - then serve the most relevant ads they can find.