As soon as that data can be collected and sold at scale, there's an incentive to collect and sell as much data as possible, without any repercussions.
Spreading rumours doesn't pay the bills, so there's no large scale incentive to spread them.
Spreading rumours absolutely helps pay the bills, it's almost an essential part of the experience of going to the pub in a small town that only has a couple.
You're right to say that there is no "large-scale" incentive though.
Journalism.
Scammers sell your data all the time. Try going to some third world country to some shady hotel, and the receptionist will tell the taxi driver exactly whre you came from and how rich they think you are, taxi driver will then take you to a scammy club, where they'll already know how much they can scam out of you, sometimes even the police is in the whole scam, so even the police officer knows all your data, before you even see them.
Meanwhile poor people were known to their immediate neighbourhood, but at a much lower level of detail. Yes, local businesses might know customers, but the knowledge was atomic and disconnected: nobody was integrating the information held by the barman and the storekeeper and the newsagent and the neighbours.
“Everyone knows everyone” vs “I know you, but you don’t even know who I am”.
Even though the bartender can spread rumors, when the knowledge is in hands os corporations, can be easily queried by governments, etc. The potential magnitude is way bigger than a rumor in your local village.
The database can be merged with others and queried anonymously without anyone knowing it even exists. The data can be sold, distributed and used against you at a much greater scale, and there is nothing you can do about it.
Are you kidding? If I move to a different town, I can take on a whole new identity, a new name, hide my heritage.
Good luck tracking me down in medieval society if I move provinces, let alone countries.
When your information was on paper in file cabinets with thousands of other people it wasn't much better than having nothing at all.
We're always so concerned with machines recognizing us, but what about other people? If I live in a small village, the owner of the general store will surely remember my face just like an ML-laden camera or POS system. We get creeped out when machines suggest things related to our past behavior, but love it when the bartender already knows what we like. People who remember you can spread rumors just like your data can be sold to another company.
I'm not trying to say that privacy doesn't matter at all, of course. I'm just wondering how much things have actually changed, privacy-wise.