Maybe you said your free version would use targeted ads - which I'm fine with personally.
It's selling data or being dishonest about how the data is used that I have a problem with, so maybe the problem is that your users trust you so they are comfortable with you having and using their data.
We can take this one step further with the proposed TURTLEDOV browser API (https://github.com/michaelkleber/turtledove), at which point the ad network doesn't learn your interests and Fiat only learns you were interested in buying a car if you click on an ad.
Or with the proposed FLoC browser API (https://github.com/jkarlin/floc) where your browser uses on-device clustering to present an interest category instead of the ad network learning interests server-side.
(Disclosure: I work on ads at Google, and am friends with the folks behind these proposals)