That’s because they still have a financial incentive to do so: Google doesn’t offer a fully paid version of their service

I totally agree. I am a Youtube Premium user for this exact reason. No ads means less financial incentive to track me (I remember a statistic where one user was worth 4cents per year, could be wrong about the exact number though). In a perfect world we would habe monetization networks instead of ad networks, on a pay per view or subscription model instead of ads. This would not only make the companies more money, but also reduce the incentive for them to track you (I would even claim that unnecessary tracking would hurt their business).

We can either have a free (as in no costs) or a free (as in liberty) internet, not both

Me whenever someone uses a decimal point instead of comma