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Unpopular opinion: I'm fine with ads as a form for instances to sustain them selves.
(self.lemmyworld)
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What do they use your data for? Selling more ads? Sounds a lot like a pyramid scheme.
Anything that makes a buck. They'll use it internally to boost ad targeting, then sell it to data brokers who can do whatever they please- primarily selling it to other companies.
There is nothing to stop your as data winding up in the hands of someone like your health insurer. Then, if they see you're being served a ton of cigarette ads, they could easily imply you have a smoking habit and jack up your insurance.
Lots of other bad things can happen with this data, there's very little regulation around the ad industry (outside of GDPR and CCPA).