From Declan McCullagh at CNet:
Google has begun experimenting with encrypting Google Drive files, a privacy-protective move that could curb attempts by the U.S. and other governments to gain access to users’ stored files. Two sources told CNET that the Mountain View, Calif.-based company is actively testing encryption to armor files on its cloud-based file storage and synchronization service. One source who is familiar with the project said a small percentage of Google Drive files is currently encrypted.
Tough technical problem for usability, but very positive if Google rolls this out to consumers. I am uncomfortable with Google’s privacy policies but their security team is top-notch, and when ad tracking isn’t in the equation they do some excellent work. Chrome will encrypt all your sync data – the only downside is that you need to be logged into Google, so ad tracking is enabled while browsing.