But the part they seem to miss (or I get lost in the statistics) is that I wont use the service if I get annoyed by the ads. So they turn me into a churn which I wouldnt have been.

Right, you’re just getting lost in the statistics. Overall revenue is a function of revenue per user and number of users. They could go after you by reducing the ads, but they would also be reducing the revenue per user, and they might not gain enough additional people for it to be worth it.

That's the delusional part. They think, that their service is so great, that obviously you don't have any choice but to use it anyway.