Richard is concerned that Google will read his email and use his activity for advertising. Leo says that Google only has computers read email, and it does this to filter spam. No human is reading through emails.
The clause that Google will use his activity to advertise means that Google will search his email for keywords, like it does spam filtering, and will customize ads on his page based on that activity. So it's for stuff he could use. It's important to note that nearly every other ISP and service does this as well. And he's getting gmail for free.