Why we should still be worried about what Google said regarding Gmail privacy

Last week a furore erupted over a statement Google made about privacy – it was widely interpreted as having said that Gmail users could have no legitimate expectation of privacy. Then Google was widely re-interpreted as not having said that. So what happened, what did it say, and now that the mistake has been corrected is everything rosy in the garden?

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Story added 19. August 2013, content source with full text you can find at link above.