http://www.tomshardware.com/news/goo...ion,33582.html

Google announced that it implemented S/MIME (Secure/Multipurpose Internet Mail Extensions) encryption, with a twist, for its enterprise customers. That twist is that its implementation of S/MIME, which is typically an end-to-end encryption protocol, is centralized or ?hosted? by Google. In other words, Google can see what?s in all of those S/MIME-protected emails.
The S/MIME protocol was first invented in 1995. A few years later, it also became an IETF standard (after a few more modifications to the original protocol). S/MIME aimed to be an end-to-end encrypted protocol that would replace the non-encrypted SMTP email protocol. It was also meant to be a little easier to use than PGP (Pretty Good Privacy), another end-to-end encryption protocol that was invented a few years before S/MIME.
With PGP, users have to share their public keys with each other prior to using end-to-end encryption, but with S/MIME, this key distribution is handled by a Certificate Authority that gives each user a certificate. Importing the certificate in the email client and signing email messages with it is what proves that the senders are who they say they are.