It's still not in the TOS today. You can read Google's privacy pages today in vain for a mention of "we read all of your incoming and outgoing email and sell the information to companies so they can target ads at you".

The closest statements are mealy-mouthed ones along the lines of "we collect information about how you use our services and use that information to improve our services". Which is true of every single business in the history of the world.