Thankfully, the browser vendors are not going to indulge you in this "arms race" fallacy, because most people don't want to antagonize the content providers.
I don't think "arms race" is a fallacy. Instead of advertising, think security for a moment. We all know browser venders are in a perpetual race against phishers and botnets and so on. So when Firefox came along, it billed itself as being "safer" than MSIE. Now think of pop-up ads. The browser vendors do indulge us in an anti-intrusive advertising race when the browsers block pop-up windows by default. My personal techniques against intrusion just happen to be a few steps ahead of Aunt Sally Sue's.