But if they can encrypt the data so the NSA can't read it--that is, if the NSA can't force them to reveal the data--then why were they revealing it in the first place?
It seems like they're either encrypting communication between each server or between each data center: the article is very vague. Either way, your data is still unencrypted inside a server (which is obvious: you can't search through your mail without knowing the plaintext.)
I assume you mean encrypting data at rest since this development takes care of all in transit encryption, well, because of ads, analytics, other predictive data intensive services like "Google Now" etc.