If giving people the choice of an ad-free premium subscription was more profitable, they would do it. The issue with doing that is the users who pay are also the most desirable audience for advertisers.

A premium model also eventually creates two separate products. The free product is (at first) built for the needs of the users to attract them and get enough volume to support an advertisement model. Then, it is gradually built and focused toward the needs of the advertisers. That gradually shifts over time once the company has captured the market on both sides (this is a two-sided marketplace after all) to optimizing for the needs of the company. It’s harder to achieve this final end goal if you have a product that is optimized for the needs of the user, because you don’t have a two-sided marketplace anymore that can be exploited on both sides. Collecting money from businesses (advertisers) in bulk and providing them support can be easier and less costly than managing millions of premium users and supporting them.