Bleeding money expanding as fast as they could so nobody else got there first.

Huge capital investment to capture the market, and as you rightly put it, exploit with all of the aforementioned shit.

But that doesn't mean they had to go down that route. Income via vaguely targeted advertising has been a standard practice for decades by newspapers, radio stations, and TV channels. They could have improved upon that old model without turning to the evil manipulators and spyware companies they are now.

Take, for example, DuckDuckGo, this is their model:

It is a myth that search engines need to track you to make money. The majority of our revenue is from private ads on our search engine. On most other search engines, ads are based on profiles compiled from your personal information, such as search, browsing, and purchase history. Since we don’t have that information per our Privacy Policy, search ads on DuckDuckGo are based on the search results page you’re viewing instead of being based on who other companies and their tracking algorithms assume you are as a person. For example, if you search for cars, we’ll show you ads about cars. We’ve even created a way to show localized ads while still keeping you completely anonymous.

https://duckduckgo.com/duckduckgo-help-pages/company/how-duckduckgo-makes-money