[alkonaut]

> Citation very very much needed as that is not at all what standard economic theory would predict.

That was assuming that the total ad spend is constant as a fraction of revenue and that revenue would be unchanged. If less effective ads overall would lead to lower revenues then the ad spends would shrink. But they would shrink equally for everyone, at least.

> there are lots of niche small businesses that literally could not survive without targeted advertising

There is nothing banning targeting. The problem is using info that users don't know/think is used for targeting, and using it for targeting. I'd be happy to take a 200 question survey as a condition for using facebook, where they ask me about my hobbies and whereabouts and clearly say it's for ad targeting. Obviously I could say "I'd rather not tell" instead of "I like guitars", but in such a scenario I'd happily give up my targeting info. But I don't want to be shown a guitar ad because I looked at one on an unrelated site with a facebook tracking pixel on it. It's absolutely dystopian.

> public is being convinced that they can have their cake and eat it too.

Yes I'm sure many think that. But I think the only way of changing the status quo is through heavy handed regulation and making initially impopular decisions and risking the death of a lot of business in the process.