GApps for education had an option in its admin console to enable ad targeting, it was off by default, the main reason it was there is that it and gmail shared much of the same infrastructure.
As for the lawsuit which despite your claims and those of your linked source (which is parroting the PR folks at safegov in their interpretation) didn't uncover anything other that what Google already stated, but sadly the efforts of these vested interests to confuse you and other uninformed persons by misusing the word "scanning" bared some fruit.
Boko Haram kidnapped over 230 schoolgirls in Nigeria. http://www.theguardian.com/world/2014/apr/30/hundreds-march-...
But even if we avoid extremists, it's easier to call people evil when they spy on their pupils using the webcams on the school provided laptops. And then, after people have complained, they do it again. http://www.wired.com/2011/06/webcam-scandal-resurfaces/
Kidnapping 230 puplis or spying on 23,000 pupils, or 230,000 or 23M?
It's literally no different than what Google does for anyone else, yet it's spying for schools because... why?
Were the children using the services under 13? I've never understood why this was potentially illegal, and never seen anything address that.
James Clapper, is that you?
According to Brin and Page: "Don't be evil. We believe strongly that in the long term, we will be better served-as shareholders and in all other ways-by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company."
https://news.ycombinator.com/item?id=7690503