You could try to argue that we should make sure that these are narrow in scope (that's already the rule despite the current practice), but that doesn't eliminate the problem completely: someone can already subpoena Amazon for "recordings taken in kylevedder's house between 4/22/2022 and 6/22/2022" related to an investigation, and they will get them. Even if you are not the target of the investigation, but they have reason to believe that the target may have visited you during that time period. Such a subpoena has not been tried in civil court yet, but it will likely be allowed. In an alternative world where tech companies don't track you, these subpoenas wouldn't work.
Google, Amazon, and other data collectors have a principal-agent problem with respect to data about you: while you would likely fight a subpoena for your location data tooth and nail, they don't care so much. They will often give up the data, and they won't even tell you they did.
The alternative business models are ad support without tracking and subscriptions. Google makes most of its money on ads that don't really need aggressive tracking, like ads for toasters when you search "toaster" or ads for other car brands when you search "Ford SUV." Arguably, the tracking might hurt their system since they try to produce fully personalized results for you. WolframAlpha is a search engine on a subscription model. Micro-subscriptions are already a thing (albeit invented/normalized after Google was invented), and it would be very likely that Comcast would bundle a Google subscription into your cable plan the way they do for entertainment products.
As far as this being bad for people, allowing companies to track you invasively is a little like not buying insurance. You won't care most of the time, but you may care a lot. Lots of people don't buy insurance, even though they should, because they severely underestimate tail risk. This kind of cognitive distortion is traditionally addressed with laws: social security, healthcare mandates (or single-payer healthcare), and car insurance mandates in some states all operate on this rationale. So should privacy legislation.