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Here's some clarification on my views, since my original post contained 
a conceptual error, as well as wording that is not explicitly contained 
in Google's various TOS pages.  I'm glad to learn that Gmail won't be 
using any personal communications in any way other than to provide the 
Gmail service; this is something I overlooked. 

However, as written, the TOS in Google Docs and Spreadsheets (presumably 
a service which Google, the University, or both will promote to MSU 
students) gives Google a great amount of privilege in its legal usage of 
user-submitted content.  Though they state that only content made 
available to "members of the public" is fair game, they do not 
explicitly outline the group(s) that this term encompasses.  Logically, 
"members of the public" could include recipients of email in which a 
link to a Google document could be contained. 

Further, in conjunction with Google's Universal terms of service, any 
content submitted or received (regardless of which Google service the 
information resides upon) is subject to this clause: "Google reserves 
the right (but shall have no obligation) to pre-screen, review, flag, 
filter, modify, refuse or remove any or all Content from any Service."

Though Google does not have an "unlimited" license to the user-submitted 
content, it has wide-reaching rights, per its terms of service, to make 
use of that content in ways which are violative of University 
information-handling principles and precedent.

I can understand that this offer is attractive in the face of 
skyrocketing IT costs, but it sets a precedent that is deeply 
troubling.  As more information is synthesized, manipulated, and 
transferred over computers and networks, a question of precedent arises 
as to the role of the University in the management of its information.  
My comment about money in the first email was inspired by my belief that 
it is the University's responsibility as a public institution to keep 
its information and knowledge from being given freely to a private 
entity.  I pay the University tuition.  At least a few of these dollars 
go toward the current IT system that the University maintains.  Would I 
see a substantial savings in my tuition if the University contracted 
information handling services out to an organization?  Even if so, what 
kind of precedent does outsourcing of University data set for the role 
of a public institution of higher education?  Upon invention of the 
filing cabinet, did the University ever contemplate outsourcing of 
records storage to a private company that owned a warehouse full of 
filing cabinets?  The United States has long had a public postal 
system.  There were good reasons for this, and the system has served us 
well.  The integrity of personal communication is essential to the 
progressive nature of a public institution like Michigan State, and 
given the nature and terms of Google's offer, I cannot see a reason why 
it would be in Google's interest to maintain this integrity.

There is no such thing as a free lunch.

-John