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And now the question is, how is Startpage paying Google without monetizing its users?

If the product is free, you're the product. I don't know anything about Startpage, but I bet we'll find they're tracking something...

Makes sense. So I was right; you are the product. They want to get ads in front of users. Note that there's nothing inherently wrong with that.

tl;dr they're paid to serve ads based on anonymized search terms