I've had this same conversation with non-technical family and friends. It seems to be a combination of not understanding networking as well as just a general mistrust. The amount of data that would be generated if _every single phone_ was constantly streaming data to their home base would be staggering. Not to mention multiple apps, streaming all voice data, to multiple home bases (Google, Apple, Facebook, Amazon) would cripple your phone's ability to do anything. As well as a family all connecting to their basic home wifi when everyone is around at the beginning or end of the day.
Or use Facetime and do an audio-only call to a friend, and let it just sit there. See how long your battery lasts while simply transmitting audio.
I have seen very weird advertising pop up on my apps, but I can always link it back to my physical proximity to a store, or similar circumstances such as my active web searches. It's easier to be worried about something they can understand, rather than the complex algorithms and machine learning that are raking in the data that we _freely give away_.