The following is direct from Google's Security and Privacy:
"In order to provide some of the core features in Google Apps products, our automated systems will scan and index some user data. For example:
-Email is scanned so we can perform spam filtering and virus detection.
-Priority Inbox, a Gmail feature, scans email message to identify which messages are considered important and which are considered not important.
-If you are using Google Apps (free edition), email is scanned so we can display contextually relevant advertising in some circumstances.
-Some user data, such as documents and email messages, are scanned and indexed so your users can privately search for information in their own Google Apps accounts.
*Google Apps data is not part of the general google.com index, except when users choose to publish information publicly."
"In order to provide some of the core features in Google Apps products, our automated systems will scan and index some user data. For example:
-Email is scanned so we can perform spam filtering and virus detection.
-Priority Inbox, a Gmail feature, scans email message to identify which messages are considered important and which are considered not important.
-If you are using Google Apps (free edition), email is scanned so we can display contextually relevant advertising in some circumstances.
-Some user data, such as documents and email messages, are scanned and indexed so your users can privately search for information in their own Google Apps accounts.
*Google Apps data is not part of the general google.com index, except when users choose to publish information publicly."