Serving up ads that are guaranteed to not apply are a negative because it means you're giving up the opportunity to serve up ads that might actually make money.
Are advertisers going to notice that 1% of people in the 'Just had a baby' group actually had stillbirths? I'd guess not, especially because advertisers don't get to know who they advertised to.
Is FB or Google going to change this to improve their conversion rate by ~1%? Probably not, 1% is not a lot.
In the end, as long as the advertising platform gets a decent conversion rate on 'Just had a baby' for the advertisers, everyone is happy.
Heck, advertisers might prefer 10% accuracy and 90% recall over 50% accuracy and 80% recall. If pushing that recall up a bit yields a few more customers, the extra cost of showing that to a lot more non-viable people might just work out.
Serving up ads that are known to be offensive to the user isn't just a lost opportunity to make money, it's also going to encourage that user to start blocking ads, which the advertisers and Google/Facebook don't want.
Is FB or Google going to change this to improve their conversion rate by ~1%? Probably not, 1% is not a lot. In the end, as long as the advertising platform gets a decent conversion rate on 'Just had a baby' for the advertisers, everyone is happy.
Heck, advertisers might prefer 10% accuracy and 90% recall over 50% accuracy and 80% recall. If pushing that recall up a bit yields a few more customers, the extra cost of showing that to a lot more non-viable people might just work out.