The OP is not equating contextual with insidious. They're pointing out, correctly, that contextual ads can be insidious. And if they're profitable, they probably will be.
A lot of the companies offering LLM services are in a race gain market share and build expertise. Right now, they can burn through millions of dollars of VC money, with the expectation that they'll turn a profit at some point in the future. If that profit comes from advertising, and critically, if users don't expect advertising in their free LLMs, because they didn't see ads in generated output in the past, that will be very insidious.