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I've had a suspicion for a few years about this phenomenon. I know that simply recording audio and transmitting it for processing to serve ads is a violation of the federal wiretapping laws. I know they know it too.
So do they get around it by doing the processing locally on the device? So the phone effectively has tens of thousands of wake words that are trained for different things. "I want a big truck" -> phone parses that out "big" "truck" and sends those words up to ~~google~~ in a keyword dump. So technically it isnt wiretapping. Right?
Plus, it avoids the security researchers who use wireshark to monitor those devices. They are looking for audio streams, not a keyword dump that is encrypted and can be sent asynchronously at a later date in a much smaller file size.
How would they know that because you mentioned a thing, that it means you're then worth targeting a ad for? "I wish i could find my fork", or "I saw someone eating a Mars Bar" or "My mate Phil just got the new Lego Batmobile" or all sorts of conversations that just mention a product in passing. What, do they have a secret set of phrases that they're listening out for that is linked to an intent to want to buy it?
It's just so far-fetched that I'm baffled that people truly believe this is actually happening.
Just because technically something might be possible, doesn't mean that there's actually a valid reason for anyone to actually do it. What is actually in it for Google to do this? Their regular, not unethical or illegal advertising processes already work so spectacularly well that they've killed off entire advertising industries already.