I say bring it on. I look forward to the day when an algorithm tells me my taste buds prefer extra spicy beef panda express, order now and have it air delivered to you in ten minutes
On one hand, I think "I can find my own products thank you" while on the other I understand the crowded space and targeting advertising does reduce the signal to noise ratio. (this is debatable I guess?)
Privacy laws and rules provide some projection, but that only goes as far as they are enforced. Nonexistence of data cannot be subverted and is a much more robust protection against the data falling into the wrong hands.
The issue isn't necessarily who has the data now. It's who might get it later.
Intruders count as the "wrong hands". A future buyer/board/CEO with fewer ethical scruples than the current managers of a given data set may count as the wrong hands, or allow it to fall into other wrong hands.
Maybe they will never sell your data, but maybe they will. There's unlimited potential for abuse from the corporate sector. What the FBI knows about me doesn't worry me much.
I'm sorry to be blunt, but that's degenerate, plain and simply. If the day arrives when people give up thinking for themselves, we've truly arrived at an Orwellian society, and your friends are damn right - we're not very far away from this.
Although it's not necessarily a discussion of their own willpower but rather whether the masses will lose portions of the power to think for themselves. Not always the same or hyperspecific portions, but we're slowly giving away more and more of our decisions to advertisements.
/Disclaimer: not sure whether I paraphrased this correctly./
Hopefully we can also use the same technology to liberate ourselves from the magnetic attraction of ads and the media and do something positive. I'd look to recent events (Arab Spring, #OWS) as a possible glimmer of hope there.