Officially, I'm sure they claim that G-Suite data is not used for any advertising purposes. However, just like I wouldn't trust an alcoholic with guarding a warehouse full of booze, I wouldn't trust this promise especially considering they intentionally violate the GDPR with a misleading, obnoxious and non-compliant consent form for EU visitors.

Furthermore, even if we assume G-Suite data itself is not used, what about general data collected by Google services? For example, a lot of their properties have Google Analytics included - does being logged in a G-Suite account automatically opt you out? What about YouTube (when logging into a G-Suite account you briefly get a redirect to accounts.youtube.com presumably to set a session cookie)? Etc. Given that Google is an advertising company, I can see it being easy for them to collect data they shouldn't, even because of an oversight (such as forgetting a "if account.is_g_suite" check, or legacy code predating G-Suite) as opposed to any malicious intent.

Not using Google means you don't have to interact with Google at all unless you explicitly want to and aren't exposed to any of the aforementioned risks.

Yes. If you read the terms when you sign up to pay them money for GSuite, it says that your data in not used for advertising, targeting, or any other analytics. Basically the minimum terms for a large organization to be willing to entrust their internal data to Google.

Yes, the GSuite data is separated from non-GSuite and is goverened by a different ToS. This includes this data not being used for advertising, conforming to different deletion requirements and more. Check out the GSuite ToS for details, we looked into this awhile ago.