Yes, it does. I just tried this, when I set a passphrase everything shows up as encrypted in the Google Dashboard. So maybe things changed since I wrote this, o

Yes, it does. I just tried this, when I set a passphrase everything shows up as encrypted in the Google Dashboard. So maybe things changed since I wrote this, or maybe I misunderstood it initially. Either way, the default is not having a passphrase, and the passphrase setting is buried pretty deep, so most people won't set it. What's worse, you cannot really avoid an initial unencrypted sync before you can set up a passphrase. The point still stands, this isn't a system designed for privacy.