I suppose the whole ban vs regulate issue is a matter of granularity. Regulation does impose a set of banned practices, but it's not like you make it out to be, where all 3rd party code would have to be banned.
The main issue is that we need to agree on what we are actually capable and interested in protecting, in an insanely fast moving industry. This is why motivated and educated policy makers are crucial to the problem. There's still to this day no where near the level of discourse on this subject that's needed happening in places with power to make a difference. Just like in the early days of the gold rush, I'm sure you could find countless cases of criminal shovel sellers.
But given the current ecosystem, this doesn't surprise me sadly. We (in the US) are locking kids up without parents for crimes they didn't commit. I suppose abusive or illegal ads aren't my biggest concern.
Let me just say: I don't know what harebrained regulation would come out of this, but I'm pretty sure I don't want it.
> Elect sane and involved policy makers to keep a watch on the market.
That's not a solution, that's a fantasy scenario.
If this means some services are no longer viable because they can't make ad revenue, then maybe that's a good thing. Nothing is free, and we still live in the Wild West with companies getting away with monetizing our information behind our backs to subsidize the service. It's one thing to "pay" me for the time I watched your ad, it's another thing to "pay" me for a profile of my activity on the site or sites, which has enough information, generally,
to uniquely identify me, and contains demographic and personal information determined by black boxes.
My point here might simply be, if it's my information, I should be entitled to know how it's actually being used.
But the first action I'd hoped to see is to make devices like the Amazon echo, and google home illegal.
> Probably the clearest example of a place where there's a reasonable expectation of privacy is in the home. A person doesn't have to be a homeowner for the law to protect that expectation; tenants who rent their homes also have a protected right to privacy. Moreover, invasion of privacy doesn't just mean that someone physically enters a place where a person has a reasonable expectation of privacy. It can also happen if someone uses electronic equipment to monitor or record what someone is doing in the home. 
This also goes for guests of your home, so as far as I'm concerned, Amazon (or my friend, or both) are/is breaking the law whenever I enter a home with one of these things installed. The regulation should demand a Amazon (in this example) to explicitly state how they are protecting my rights given the presence of an active microphone in the home. As things stand they are clearly not respecting our privacy.
Even Apple, who makes a point about how "Hey Siri" works isn't completely off the hook. I'd be interested in talking about Japan-esque laws requiring a sound to be played when Siri is activated, much like how a shutter noise must be played when a photo is taken.
The point here is, it's MY LIFE, I should at least know what's being done with it.
In other words, if I defer any part of my services to a third party, I cannot do it anymore. Goodbye payment processing, fraud detection, spam/DDOS protection... the list is endless. Advertising is the least concern here.
See, that's the difficulty with regulation, you need to be very careful what is and isn't included. You don't want to accidentally prohibit crucial services. You don't want to burden business with liabilities by being vague. You don't want to leave too many loopholes or else your regulation does nothing but cause administrative overhead.
If you have so much faith in politicians to do go good job here, by all means, go out and lobby for this kind of regulation. Let's just say I don't share your optimism.
> My point here might simply be, if it's my information, I should be entitled to know how it's actually being used.
If you don't like your information being used for pretty much any purpose, don't give it to me. I can't preconceive of all the possible ways I am going to handle your data. Maybe I want to switch web hosts, or maybe I want to back it up somewhere else. Maybe I'm an idiot and I'll store it on a database with no password, exposed to the internet.
> This also goes for guests of your home...
Not necessarily. Depending on where this takes place, I don't have to disclose that you're being video or voice monitored. Maybe you don't like it that way, but those are my rights trumping yours.
> I'd be interested in talking about Japan-esque laws requiring a sound to be played when Siri is activated, much like how a shutter noise must be played when a photo is taken.
This is a good example of a pointless law. Sure, the cameras make a "shutter sound" when taking a photo, but they don't make a sound when recording video. When Siri activates, it does make sound, but if you want to activate it by voice, clearly it needs to listen all the time for the keyword (or whatever sounds like the keyword). There's no way around that.
So, what are you going to do, require bright flashing lights on all cameras/microphones?