That was the genesis of the phrase, yes. As a kind of corollary to caveat emptor. Yet it doesn't serve that function in practice, because in context it sneakily redirects blame onto the "emptor".
Take this hypothetical discussion, for example.
> Comment: I think Facebook spying on users is a gross invasion of privacy and we should advocate for better privacy laws.
> Top Reply: If you aren't the customer, you're the product.
In reading that, the reply doesn't read like a warning. It instead shifts the focus away from Facebook being responsible for invading people's privacy, and towards blaming people for using Facebook because they should have known better. Caveat emptor.
It's been an insidious scourge on serious discussions of privacy since its inception.
It's not bunk, it's a good reasoning.
The reason it's "increasingly...bunk" now is that the implication--that paying prevents this--is turning out to be wrong.
You're the product, even if you're paying.