Citation required.
Not one Ad was required for the Internet to be useful. Hell, the WWW started as a bunch of hobbyists sharing info about what they liked. Google's killer product their search index. Not Ads.
I don't need to pay anyone for me to host something aside from the domain name, and a connection to an ISP. I just have to want to host it. The rest of the world at some point decided the Net MUST be monetized. Cookies came soon after, then JS, then all the familiar trappings of the web as a monetized medium.
Note; it becomes relevant for scaling or platforming to be able to be paid, but evven then, there are other ways to do that besides selling everyone else's privacy, comings and goings, etc.
Once you add money to something, you lose anonymity and safety from surveillance. No one would care one iota about what went on in Cyberspce if there wasn't a buck to be made.
I miss those days so horribly. Information shared and organized for it's own sake...
And yeah hosting is so cheap the cost of it is pretty irrelevant per user. Definitely not necessary for tracked ads to pay operating expenses.
However content creation might take more money. And the whole marketing, admin etc circus at most sites.
Wikipedia might just be the most valuable information resource there is with the Stackexchange network also ranking highly. The former has no ads and the latter has a negligible number. High-quality traditional media are often already pay-walled.
First of all, I think that ads in the Internet are important, it's a driving force. Without ads there will be no Internet with lots of "free" resources, everything valuable will be paywalled which is a problem for poor people and nuisance for the rest. That's already an issue for many information websites because of abundant adblock usage and those websites are paywalling their articles.
If ad is not targeted, you'll get terrible click rate for niche ads. So your advertisement budget will cost more and some businesses just won't work, as you won't be able to attract enough customers for reasonable budget. Another issue is that advertisement budgets are paid by customers and inefficient advertisement lead to higher costs of the end product.
It's basically like TV where ads cost a lot and small players just can't afford it. And that's because those ads can't be targeted.
Because of mentioned issues, I think that targeted ads are needed for the Internet, they're making world a better place in the end.
Google clearly tries to find a balance between privacy and ads targeting. And that's a good thing. May be FLOC is not perfect, although I'm not sure if it could be implemented in a significantly better way. But just disregarding targeted ads for me sounds like a wrong solution. What should be done is regulation of advertisement platforms which should be prohibited by law to track individual users and just use anonymized information, voluntarily provided by the user agent.
And those who don't like FLOC idea, probably will be able to use browser extensions to modify its behaviour.