GOOG Alphabet Inc

By Jack Nicas 

Google said its computers will soon stop reading the emails of its Gmail users to personalize their ads, a move that addresses a longstanding privacy concern about a product that is central to its growing corporate-services business.

The core unit of Alphabet Inc. has mined users' emails for personal data to serve them more relevant ads since it launched Gmail in 2004, which almost immediately sparked privacy concerns.

On Friday, the company said it would stop the practice later this year to align its free Gmail service with its corporate offering. Corporate Gmail already doesn't mine emails for information, but Google's business model of collecting user data generally has contributed to concerns about privacy that complicate its effort to sell more technology to corporations.

Google says that unlike with its free, advertising-supported services for consumers, it doesn't mine corporate clients' data for advertising. "Google's (corporate) customers own their data, not Google," the company said in an online post. Google is betting that selling online services, including Gmail, to other companies and hosting firms' data and systems on its computers can one day surpass the revenue of its massive advertising business, which brought in nearly $80 billion last year.

Google doesn't report revenue for its so-called cloud business, but the non-advertising segment that it is part of grew 41% to $10 billion last year. Google is increasing its sales push in that cloud industry to catch up to market leaders Amazon.com Inc. and Microsoft Corp.

Even with the change, free Gmail users will still see ads above their emails, but those ads will just be personalized from the other data Google collects about the users, including their location, internet searches and web history.

Still, losing data from email correspondence is likely to weaken Google's profiles of users, which enable the company to charge advertisers more to target specific groups of consumers. Google appears to be betting that reassuring its lucrative corporate customers that their emails are safe is worth the trade-off.

Write to Jack Nicas at jack.nicas@wsj.com

(END) Dow Jones Newswires

June 23, 2017 16:00 ET (20:00 GMT)

Alphabet (NASDAQ:GOOG)
Historical Stock Chart
From Mar 2024 to Apr 2024

Alphabet (NASDAQ:GOOG)
Historical Stock Chart
From Apr 2023 to Apr 2024