Being in the search and email industries, I'm keen to their tactics. So here it is...
The Top 5 Reasons Google Gives Away Email:
5. Provide internet users a simple one-stop shop.
Google wants to give everyone from the elderly to the young, an easy way to use the internet easy. They're product are consistently made simple enough for almost anyone to understand as groups have found (see Golden Triangle study). But why? Google is estimated to already control over 25% of the internet advertising revenue through its own and partner websites. That effectively means for 4 every users; Google at least receives the benefit of 1. At this point their growth opportunity is in attracting more consumers. This is demonstrated by Googles free metropolitian wi-fi plans which undoubtedly will bring more people online.
4. To take advantage of the #1 usage of the internet.
Email is, and has always been, the largest reason people go online.
3. Gain user attraction to Google search.
Email search and Web search from one text box.
2. To provide contextually relevant advertising.
If you didn't notice, those ads on the side are matched to the content of your messages. Most people don't realize that this was disclosed in their term of service.
1. To gathering marketing data in real-time.
New trends can be extrapolated quite rapidly. While its unclear if Google is doing anything with this today, it could be sold in the future. Afterall, selling popular keywords is what the search giant does best. Many consumer advocacy groups have cried foul, but the fact is that the wire (tapping) protection act does not cover media transmissions which are stored such (i.e. email messages on a server). For a futher analysis of this see EPIC.