I agree with you although I feel you might be seeing things to simplistically?

Showing ads is the first level and from that perspective I suppose it's fine.

At the next level is harvesting data from those ads and sharing that data with third parties. I feel that's where things get very, very messy.

Because if ads can be targeted based on a person's profile, so can other manipulations. Especially if that data is available with an authoritarian government.

Since most companies showing ads don't play fairly, users in turn choose to block ads completely.