Will full encryption sideline Google's targeted ads?

Mining personal data to deliver targeted ads is the lifeblood of Google's business -- and of many other online firms. But what if that data dries up at the source?

Google released an early version of a new tool recently that will provide full "end-to-end" encryption for email. It's a super-strong cloaking technology that scrambles messages before they leave their browser and keeps them that way until they're decoded by the recipient.

The technology makes use of a private key-string that only the user has access to, meaning even the email provider can't read the contents of messages. Google says anyone will be able to use the tool with their existing web-based email service.

It was hailed as a big step forward in privacy, but the increased use of strong encryption also threatens the ability of online firms to sell targeted ads, altering the calculus that makes it worthwhile for them to offer online services for free. Google, after all, scans emails to deliver keyword-based advertising, and for other purposes like blocking spam and malware. Yahoo also scans email, though Microsoft says it does not.

"This tool is in direct conflict with their business model," said Tyler Cohen Wood, an online security expert and cyber branch chief for the Defense Intelligence Agency within the U.S. Department of Defense. For Google to offer it, she said, is strange.

Google said the tool is intended for a subset of users who want additional security beyond what the company already provides. "We recognize that this sort of encryption will probably only be used for very sensitive messages or by those who need added protection," Google said in its announcement.

But its goal is to eventually make a more polished version available for download in its Chrome Web Store. And as users become more insistent about privacy, other online firms may offer similar capabilities.

End-to-end encryption is attractive to privacy advocates because if law enforcement or intelligence agencies want to get hold of personal communications, they have to target the end user directly -- the service providers don't hold the encryption keys. That's a more labor-intensive process than bulk surveillance of a provider's servers.

It can also be attractive to service providers, because it removes them from involvement in providing access to their users' data.

But if encryption is adopted by a significant percentage of users, online firms could find it more difficult to monetize their services.

"With targeted ads based on email, if there's less to see, there's less to target," said Matthew Green, a cryptography expert and computer science professor at Johns Hopkins University.

If they're unable to scan users' emails, online firms will be forced to offer less targeted advertising for those services, which could mean they'll make less money from them.

"Their business models would have to change," said Matt Bishop, a professor at the University of California, Davis, who studies computer security.

Service providers might have to start charging for some services that are currently free, or at least charge people who opt to use the added encryption. "It will become less valuable for companies to move your emails around for free," said Johns Hopkins' Green.

Online service providers have focused most of their encryption efforts so far on protecting data flowing from customers to their own servers. Google has been encrypting user communications with Gmail using SSL by default since 2010. Facebook implemented the technology by default in 2013 and Yahoo switched it on for all mail users in January.

That form of encryption scrambles messages while they're traveling over the Internet, but service providers can still read their contents once they reach their servers to target their ads.

End-to-end encryption scrambles data from the moment it leaves a person's browser and keeps it encrypted until the recipient decides to view it. With Google's new tool, therefore, the company has no opportunity to generate contextual ads.

Peter Eckersley, technology projects director at the Electronic Frontier Foundation, said Google may be trying to indicate that providing more advanced privacy control outweighs the potential impact to its bottom line.

"It's a sign that Google sometimes puts principles ahead of a narrow conception of the bottom line," he said.

"Google is trying to be a good Netizen," echoed Ronald Woerner, director of the cybersecurity program at Bellevue University. "They see the problem and are trying to do their part as one of the largest providers on the Internet," he said.

It will probably be some time before Google's tool sees wider use. Right now it exists only as source code that developers must compile themselves. Both the sender and receiver must have it installed -- or some other OpenPGP encryption tool -- for it to work.

It will also require a few more steps than sending a regular email. The recipient will need to share their "public key" ahead of time with the sender. Your public key will be created when you set up the extension in Chrome. The sender will need to save the recipient's key on his or her computer, and import it into the plug-in.

Google didn't say when it expects to make a polished version of the tool available for download, or whether it will automatically incorporate the tool into Gmail. But whether new tools like Google's are made the default or not, with enough support, they could complicate the lucrative relationship Internet giants have with our data.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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