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According to Reuters:

Google Unveils Email Scanning Practices in New Terms of Service
April 14, 2014
Google Inc updated its terms of service on Monday, informing users that their incoming and outgoing emails are automatically analyzed by software to create targeted ads.

The revisions more explicitly spell out the manner in which Google software scans users' emails, both when messages are stored on Google's servers and when they are in transit, a controversial practice that has been at the heart of litigation.

Last month, a U.S. judge decided not to combine several lawsuits that accused Google of violating the privacy rights of hundreds of millions of email users into a single class action.

Users of Google's Gmail email service have accused the company of violating federal and state privacy and wiretapping laws by scanning their messages so it could compile secret profiles and target advertising. Google has argued that users implicitly consented to its activity, recognizing it as part of the email delivery process. -more