Go further: services will offer features in exchange for more data. Your worth could be tied to how private you are with your data... ie. more data hoarding = more valuable target. This creates an incentive structure for users to hoard their data, only selling it to their most important services, and services themselves will attempt to create features that make providing that data worth it.
The reason people blindly say ok to every permission popup is because there's no incentive to say no. So yeah, your concern makes sense now but it might not in a "web5" world. I can guarantee any app saying "please give us all your data to use this" would get btfo'd very quickly in a world where people can use their data as leverage.
Technology influences behavior and mindset, and I think this particular idea might be a good influence. It's certainly better than what we have now where every service simply takes all your data or buys it from other companies.
My primary concern is data integrity; is storing the data on the global network good enough to disincentivize apps from scraping local user data with their own tools? What would stop an app from using the protocol and also maintaining its own database? Is that actually part of the deal? For example: Bring data from other apps to this one, and you can access a set of features. This app will now mine new data to put back into the network?