This is a question (often posed as a fact, but it's not) we see almost daily. Someone in an article's comments or on social media will trot out the line about how Google sells your private data and it is evil and so on. That's usually followed by how another company is better because they don't collect user information (which is equally wrong, as they all do it) or a bit about you being the product. It might even happen in the comments on this article. Sometimes the "Information Age" is also the disinformation age.

To be clear, nobody outside of Google knows the exact details of how it processes your data, but we do have a bit of understanding of the ways it is collected, and why. It's an interesting — and profitable — business model and makes for a great conversation.

When you agree to the terms and privacy policy of any Google product, you're told from the start what data is being collected (it's a lot, to be sure) and exactly who Google will share it with and when. Basically, it only shares your data if:

  • You ask Google to share it.
  • A government forces Google to share it in court.
  • You have a Google Apps domain administrator managing your account(s).
  • Google needs a trusted third-party to help process it — using these same privacy standards.

Google can also share generalized data to "show trends about the general use" of its services. You get counted when Google tells the world how many people use Gmail or Chrome. Google also promises that if it is ever bought out by another company, we all will get a notice in advance of any privacy policy changes and a chance to remove our data from its servers.

The privacy policy is really easy to read, and written in plain language that anyone can understand. You should read it.

So, how do they make money this way?

This is the interesting part. Google does use your data to make money. A lot of money. Scrooge McDuck swimming in a pool filled with gold coins level money. But not by selling it off.

Instead, Google offers a tailored service to the people buying ad space. Let's say I make a product that appeals to people who like to go fishing. I want everyone to know about my product, but my research shows that people who like to go fishing are more likely to spend money and buy my product. Having the people who like to go fishing see my ads is really important to me.

Your personal data is valuable to Google because nobody else has at this level.

Google knows a lot about people that use its services. It knows what we search for online, what we buy from Amazon (and other places that use Google Analytics or send emails about purchases), where we have been and places we've investigated and even how we got to the places we've visited. That's some scary stuff, but we need to remember that Google disassociates it all from your personal identity as it's collected and processed. No human being is reading your stuff because there is too much stuff to read. These things are associated with what's called your "unique advertising ID" and Google keeps track of things that this ID searches and buys and gets directions for and everything else it thinks is important.

You have some control over all of this. Visit your Google My Account pages and see just what you're sharing, and how you can manage it all. Opting out of interest-based ads is easy, though it doesn't mean Google stops collecting the data — it just stops associating it with your advertising ID.

It's also important to note that there are some things that Google does not associate with your advertising ID. Anything about your race, religion, sexual orientation, or health or other sensitive categories is never associated with you, even anonymously.

After all this data is collected and cataloged, Google is able to tell me that if I pay it X amount of dollars for advertising, it will be able to show my ads to devices (your phone, your tablet, and your computer) being used by an account with an advertising ID which shows an interest in fishing. My ads will also show in a rotation for people who have opted out or aren't signed into Google and don't get interest-based ads. But the bulk of my product's exposure will be targeted to the screens of devices with an advertising ID that shows an extra interest in fishing — the exact people I want to see my ads.

If Google sold any of this information to anyone else, it wouldn't be able to offer this unique service to any company wanting to buy ad space. And in the end, Google is an advertisement company.

We should be concerned about the personal information we make available, and Google does collect a lot of data. It can be scary, and the ways it collects and processes it all is a bit confusing and technical (probably with robots), but it is not selling your data. It's too valuable to let it go.

Update January 2018: This article was previously published but the information is still relevant. Portions were updated with new information.