Comment by jonlarson

That's a good question. I've been involved with some research, outside of Google, on this exact topic. Because we don't have the same data sets that Google has, we have a slightly different methodology for gathering data and we found that hotmail (or any Microsoft mail provider) never even has the option to encrypt if you want to. We always though it was strange that they didn't, and this new data seems to suggest that there may be something else going on.

One possibility that was already pointed out is heterogeneous architectures. It's possible that different systems in hotmail, maybe in different geographic regions or across national borders, use encryption.