Free market depends on relatively equal knowledge. If there is significant knowledge disparity it's no longer free.

Internet initially helped consumers with knowledge. Now that balance has shifted to more and more corporations knowing more.

If we enshrine into law significant privacy expectations, that can restore the knowledge balance.

Depends on what you mean by "free market". If you think "free market" means market participants should just be free to do whatever they want then yeah, it's weird. But if you think "free market" means that products and prices should be determined by supply/demand and a competitive race to the bottom between market participants, then it's not weird at all.

I mean if you're a laissez-faire capitalist, you can't have it both ways.

But if you believe in anti-trust, regulation, and competition as external checks (typically enacted through governments) on capitalism's power - then you can indeed square the two positions.