This is a bizarre couple of sentences. I don't think you understand the technology _at all_.
Firstly, it doesn't really matter how close the screen is to your eyes. Try moving your phone closer to your face or do you trust the app that you're about to let your eyes get closer to?
Secondly, it doesn't have the ability to control your sense of reality. At least, not any more than seeing a movie in a cinema does.
The thing is, I actually agree with your second sentence but only in the context of their social media platforms i.e. silently building echo chambers around users, experiments with shaping of user's emotional state and political opinions, etc.