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When Google says they aren't read, they mean just that. Assuming that you believe Google, your letters are scanned for keywords, but they are not read by a person and the keywords are not indexed and logged. So only the ad serving machine knows what's in the letter.
If you look at what has happened in recent years with the Bush administration eavesdropping on telephone calls and emails running through the biggest providers in the country (and this applies if you're not American, but correspond with Americans), frankly Google eavesdropping is the least of my worries. AT&T and other huge DSL providers crumbled and gave in on this and allowed the NSA nearly real-time access to their email stream.
If you want your email to be private, get some PGP type of platform, use a desktop client only, and encrypt all your email and accept only encrypted email so that if someone quotes you and replies, you don't have your original letter resent in unencrypted form.
Otherwise, you have to ask yourself - do you believe what Google tells you who, by all appearances, have been pretty open and up front about this? Or do you believe AT&T who let all email passing through their servers (whether you were the sender or the recipient) get not only searched for keywords, but then flagged and sent to the NSA and put in their database specifically for the purpose of investigating your activities?
I'm not a particular Google fan and I'm not a particular tinfoil hat guy, but one should be clear about where the real frontlines are in the battle for online privacy and not be naive about email being safe just because it isn't displayed with contextual ads.
Besides, even if you maintain your own servers and email, like I do, it still doesn't keep your email out of 3rd party services that back up every single email you send because most of the people in the world doen't maintain their own email services.
No matter what you do, odds are somewhere your emails are permanently stored at Google, Yahoo, Microsoft or any other 3rd party mail provider.
Not trying to fan the tinfoil flames but free email is most likely archiving nearly everything you send regardless of your personal choice of email provider.
Some might not find the very interesting, but archives are far worse than some program analyzing your email because the archives make everything you ever send just a subpoena away from being seen!
The only way to be safe is to never send anything you wouldn't want anyone, and I mean ANYONE to ever read for any reason.
[edited by: incrediBILL at 8:23 pm (utc) on Feb. 2, 2009]