I agree with you that there needs to be ground rules/terms, but in the form of regulation.
If Google chose a middle ground, they'd give away the Pixel phones for free, or at least heavily subsidized. But they don't have to, so they don't.
If no one stops you, sell on both ends.
There's arguments for and against this:
For: Newspapers and magazines are an example of selling a product full of advertising.
Against: However many online businesses and a lot of iOS/Android apps do offer paid plans that turn off the ads and nothing else.
I agree with you that there needs to be ground rules/terms, but in the form of regulation.
If Google chose a middle ground, they'd give away the Pixel phones for free, or at least heavily subsidized. But they don't have to, so they don't.
If no one stops you, sell on both ends.