I thought Google Drive did as well, is that not the case?

No. Google Drive data is encrypted when being transferred, but not at rest.

My guess is that Google does not like encryption as it prevents de-duplication between users.

For end-to-end Google Drive encryption you'll an app like BoxCrypter or SyncDocs.

Based on what I have read about Google's internal services, I don't believe your assertion to be true.

The fact that Google can offer fulltext search of documents implies they cannot be encrypted, because Google can read them.

That depends on what you mean by encryption. The data can still be stored in encrypted files where Google has the key(s).

https://cloud.google.com/security/encryption-at-rest/#encryp...

By some definition, accessing gmail over TLS counts as "in-flight encryption" too.

Encrypting when the organization has the keys is only effective when accessing the ciphertext is easier than accessing the key material.

I'd prefer a solution where Google could only store encrypted blobs with no access to my keys and all decryption happens on the client device.