Susan Wojcicki, senior vice president of Ads and Commerce for Google Susan Wojcicki, senior vice president of Ads and Commerce for Google

Even as Google celebrates its 15th birthday today, a new court ruling finds that Google's practice of searching email accounts to come up with keyword-based targeted advertising may be violating Federal and California wiretapping laws.

The ruling from US District Judge Lucy Koh is part of a pending class-action suit that accuses Google of wiretapping every time it scans users' Gmail accounts to look for keywords that it can use for ads within Google services. Koh's ruling was in response to Google's motion to dismiss the whole case before it even got started.

Google's motion was based on two arguments: that there was no actual interception of user's messages because there was no interception "device" used, because the "reading of any

emails would fall within the 'ordinary course of business' exception to the definition of device. The second argument was that Gmail users knew what they were getting into when they signed the Gmail terms of service.

Koh wasn't buying what Google was trying to sell.

In the exception argument, Koh used precedence to establish that a process used in the "ordinary course of business" does not mean every process can be used—only the functions that are only necessary to the transmission of email.

"Google's alleged interceptions are neither instrumental to the provision of email services, nor are they an incidental effect of providing these services. The Court therefore finds that Plaintiffs have plausibly alleged that the interceptions fall outside Google’s ordinary course of business," Koh wrote.

As for user consent, Koh did not believe that Google had done an adequate job spelling out the email scanning practice in its Terms of Service and Privacy Policies. And non-Gmail users were getting their emails scanned without any say in the matter whatsoever.

Koh's ruling is not a declaration of guilt. It merely states that the plaintiffs in the case against Google do indeed have an effective enough argument so the case won't be dismissed before it even goes to trial.

Google is expected to appeal this ruling on its motion to dismiss. If that appeal fails, it will seriously hurt Google's defense that scanning emails for keywords is a normal part of how it handles email delivery.

If, ultimately, the plaintiffs win their case against Google altogether, the impact could be huge: while it is not clear how much specific revenue Google gets from email-based advertising, eMarketer estimates that Google holds a total of $34.5 billion of the $104 billion digital ad market in 2013.

If any significant share of that revenue comes from Gmail ads—and given Gmail's 425 million-plus users, that seems likely—losing this case could be a big blow to Google's revenue stream.

 

Image courtesy Reuters/Stephen Lam.