Gmail: Caveat Emptor

Mark Evans
Financial Post
Everyone knows there's no such thing as a free lunch, and Gmail is a perfect example.
Google plans to launch a Web-based e-mail product in a market already dominated by Microsoft Corp.'s Hotmail and Yahoo! Inc.'s Yahoo Mail. To attract consumers and stake out its own distinct turf, Google will provide Gmail users with 1,000 megabytes of storage space — compared with Hotmail's two megabytes and Yahoo's six megabytes.
Most people will not come close to using 1,000 megabytes of storage — unless they want to store hundreds of MP3 songs and thousands of photographs online — but Google needs something to differentiate itself and memory is getting less expensive by the day.
The catch, however, is Google's plan to scan Gmail messages so it can present targeted advertising. People who write e-mails about vacations to Mexico could, for example, see banner ads for Expedia.com or Travelocity. com. Google is trying to address the age-old issue of making ad campaigns more relevant and powerful. The happier advertisers are, the more likely — in theory — they are to continue spending money.
Not surprisingly, the privacy folks are up in arms because they claim Google's scanning plans could lead to abuses. The Electronic Privacy Information Centre has vigorously complained while British-based Privacy International has filed a complaint with authorities.
Give these groups credit for ringing the alarm bells but, frankly, their efforts would be better spent fighting privacy battles elsewhere.
If you are really concerned about privacy, then don't use Gmail and don't send e-mail messages to people with Gmail accounts. It's that simple.
Google has been completely upfront about its Gmail plans. It has made no secret of the fact e-mail messages will be scanned. The way Google figures it, consumers will get a free service with lots of storage and see advertisements that appeal to their specific interests. For advertisers, e-mail becomes a more valuable vehicle with the potential to become as powerful as the search engine market which has become a lucrative business with the use of keyword-based advertising.
For Google, it is a win-win-win proposition. Consumers are happy, advertisers are happy and Google is happy if Gmail turns into another rich revenue source.
Should concerns about privacy be brushed aside? No. As long as Google remains upfront about what it is trying to do, and consumers are willing to “pay” for Gmail, there should be no problems. It is all about disclosure. Let's not forget that DoubleClick Inc. tracks the Web sites that computer users visit so it can do a better job delivering relevant advertising.
If Google discovers there is enough of a consumer backlash about its scanning plans that it attracts fewer Gmail users than anticipated, its plans will likely be quickly modified. The presence of two strong rivals in Hotmail and Yahoo will keep Gmail honest.
And while Gmail, which is apparently being beta tested by 1,000 volunteers, friends and Google family members, has attracted its fair share of buzz and media coverage, Hotmail and Yahoo will have to respond strategically. Look for both rivals to increase the amount of storage they offer, and enhance the premium fee-based e-mail services they offer.
Web-based e-mail is a competitive market with dozens of legitimate choices other than Gmail, Hotmail and Yahoo. At the end of the day, consumers will decide what works best for them. If they don't want Google snooping around their e-mail, Hotmail and Yahoo are high-quality alternatives.
There is no doubt Gmail will attract plenty of users because of the storage bonanza and Google's strong brand.
But its success is not a slam-dunk because when something is free, consumers can be fickle, and privacy might be one of those things that drives them away.
© National Post 2004