Well, not exactly.
According to ARS Technica, Google scans all incoming and outgoing emails content looking for information it can use to better target ads to the email recipient.
Google added a paragraph to its terms of service to tell customers that, yes, it does scan e-mail content for advertising and customized search results, among other reasons: "Our automated systems analyze your content (including e-mails) to provide you personally relevant product features, such as customized search results, tailored advertising, and spam and malware detection. This analysis occurs as the content is sent, received, and when it is stored."
While the new text makes the scanning practices very clear, the issue at hand for many of the plaintiffs in a lawsuit filed against Google is whether non-Gmail users are obligated to be familiar, or were familiar, with the Gmail terms of service even though they were not users themselves. The specific mention of "received" content suggests Google may not want the burden of warning non-Gmail users that e-mails sent to Gmail will be scanned. The lawsuit against Google alleged that the company was violating wiretapping laws by scanning the content of e-mails. The plaintiffs' complaints vary, but some of the cases include people who sent their e-mails to Gmail users from non-Gmail accounts and nonetheless had their content scanned. They argue that since they didn't use Gmail, they didn't consent to the scanning.
It makes sense that Google can't provide approximately 1 billion email accounts for free. That is to say, somewhere, the cost of operations has to be paid, and the way they do this is by scanning emails for information relevant to Google's advertising operations. If you appreciate your spam tailored to your product preferences, you may not care that they scan your email, but if you value your privacy, and you want your email to be read only by the recipient, then a free GMail mailbox is not the way to go.
Czar Mail does not scan the content of emails passing through it's systems.
Czar Mail members have to present ID before they can get a mailbox, and criminals won't do that because their identity would be known. When spammers send spoofed emails to Czar Mail's open port, they are immediately rejected: they're never delivered to the recipient's inbox. Legitimate Czar Mail members log onto Czar Mail's secure port with a password (which is done automatically by their email client software), so their identity is verified. Spammers can't spoof Czar Mail members because they don't know the forged sender's password.