I think the privacy concern here is a real one. However I don't see the big deal about advertising in games. When I'm playing a game like GTA4 which is supposed to be in NYC, or Rainbow 6 vegas, making a city look real is a major part of those games. Real cities have advertising: billboards, storefronts, posters, whatever. "Fake" adds work great for those, but seeing an add for a company I've heard of certainly doesn't hurt the immersion, it can actually help it. Of course this doesn't apply to the stupid big splash-screen adds or things showing up in blatant, or gameplay changing ways. Those are annoying and need to go. Clearly some games can add this (like those I mentioned above) while others, say Final Fantasy or Mario anything will never lend themselves to this. I think it's a matter of context. Grabbing private information from my computer/console to try and customize these adds is a direction I'm not a huge fan of, but this is very much not isolated to video games. It's all over the web and I'm sure advertisers are trying to do it elsewhere.

I'm all for not giving kids M rated games, thats why the ratings even exist. What you're missing is that there are no laws anywhere, that I'm aware of, that make it a crime (even a misdemeanor, let alone a felony) to let a kid into an R rated movie, or sell them that movie. The same goes for music, TV, and books, which don't even have ratings yet can be just as violent as any other media. I believe it should be store policy to not sell M rated games to kids, but if one employee slips, they shouldn't be marked for life.