Google, the defending champion of the search engine wars, has decided to attack rivals Yahoo! and Microsoft on their own turf by offering a free, web-based email service called GMail. As usual, Google is thinking big: each user will get a gigabyte of space to store email messages. That’s 500 times as much as Microsoft’s HotMail service. But some activists warn that GMail users would pay a steep price for that extra storage space: their privacy. They’re trying to shut down the service before the public even has a chance to try it.

Why the fuss over a free email service? In developing GMail, Google leveraged its expertise from the search engine business in two ways. First, Google will encourage users to leave all their email on its servers indefinitely and provide powerful search features to help users quickly find old messages. Second, like the Google search engine itself, GMail will feature targeted text advertising. The system will use the content of users’ emails as a guide to choosing ads to display alongside each message. If you exchange emails with a friend about an upcoming trip to the Bahamas, GMail might display ads for airlines and hotels that offer service there. Not only does this increase ad revenue for Google, but it can improve the user experience, too. Advertisements are more likely to be for products the user is actually interested in.

Understandably, this idea gives some privacy activists the creeps. Chris Hoofnagle of the Electronic Privacy Information Center compares it to allowing your phone company to listen to your conversations or the postal service to read your mail. California state senator Liz Figueroa has threatened to write legislation banning Google’s service unless changes are made.

Their complaints sound logical until you consider how the system works. The selection of advertisements is done entirely by computer programs; no Google employees will be snooping through users’ email. Moreover, advertisers won’t be told which keywords might have led to their ad being shown to a particular user, so the contents of a user’s email stays private. Indeed, as Google has pointed out, most free web-mail services offer spam filters that must scan users’ email messages to determine which messages are spam. Scanning emails to choose advertising is no different.

Critics retort that there’s no guarantee that Google won’t change its policies in the future. For example, Google could cross-reference information in emails with other Google services, such as its search engine, to create a comprehensive user profile that it would then sell to advertisers. But it’s hard to see how this is different from other free email services. Competitor Yahoo! not only offers a search engine, but online dating and financial services as well. Surely, those offerings are more prone to privacy invasions than a search engine.

Regardless of the merits of Google’s approach, legislation would be counterproductive. Without strong revenues from its targeted ads, it’s unlikely that Google could afford to offer each user a gigabyte of storage space, one of GMail’s main selling points. They would be forced to trim the service back, and perhaps abandon the idea altogether. Sen. Figueroa might claim the mantle of consumer protection, but consumers don’t benefit from having choices taken away from them.

Google has been candid about its business model, and users should be allowed to choose for themselves whether they’re comfortable with Google’s terms of service. If consumers think a free gigabyte of storage space is worth the risk to their privacy, they should be free to make that choice, no matter what politicians in Sacramento or Washington think about it.