Take two competitors selling exact same stuff for the same price. If one adds ads to their product, they can lower the price. If they can ad data collection, the price drops further.

You just can't ethically compete on such market.

I'm not sure that is necessarily true but the buyer making a decision needs to understand the differences between products. IMHO one of the problems right now is that manufacturers using these user-hostile practices don't have to prominently disclose them. Many people probably buy these products completely unaware of aspects they might not like if they knew about them.

If packaging and promotions had to carry prominent warnings about user-hostile practices, that would level the playing field a bit. Better would be if the products themselves had to indicate whenever any sort of monitoring or phone-home system was operating, because that way everyone else using or near them also gets a warning that they might be spied on.