Most people in fact know this and assume they are being tracked everywhere and they also assume that the service providers (Google, Facebook) can read everything.
The problem is not that alternatives are too expensive, but that there are no good alternatives. I would be glad to pay $5/month to Google to get an ad-free version.
There was a recent blog post about migrating from gmail to FastMail on here earlier this week.
In my personal experience, it's been excellent. I've but using it for about a year and a half now, receiving from custom domains and sending from their servers.
Their webapp is better than Google's and it's actually the main reason why I've stayed with them.
I disagree that most people know this. I imagine most reasonably technical people do, but I'd be amazed if most people on the street understand any of this.
The problem is not that alternatives are too expensive, but that there are no good alternatives. I would be glad to pay $5/month to Google to get an ad-free version.