Scanning email for content to target ads was a public controversy when gmail was introduced to the public in 2004.

http://www.theguardian.com/technology/2004/apr/08/onlinesupp...

http://epic.org/privacy/gmail/faq.html

Here is a New York Times article on gmail from 2004 discussing the privacy issues around google scanning email content. It is a controversy that came and went, so I can imagine people who were young and not using email at the time missing it entirely.

http://www.nytimes.com/2004/06/21/technology/21google.html

I wasn't aware they'd ever denied it.