Earlier quoted context omitted.
Certainly the costs in the 90s were tied directly to physical distribution and comparatively lesser market demand. Whereas nowadays digital distribution is king and market demand is ubiquitous. I'd consider those factors to be responsible for driving prices down before I'd give a multinational corporation credit for allowing me to use their product (that I paid for) in return for pervasive advertising.
Windows 95 had a suggested retail price of $209.95 https://archive.seattletimes.com/archive/?date=19950607&slug... This magazine from 1995 had a CD full of stock images for sale for $18.98 https://the-avocado.org/2018/03/16/lets-read-pc-magazine-jul... So I don't think the physical distribution was a large percent of the price.
I find it hard to accept the explanation that in-app advertising is the tradeoff I get when buying a tech product at a given price. Either it's free and it serves me ads, or I pay for it and I get to opt-in to ads if I choose.
It's the same argument for Smart TVs. These companies know they can have their cake and eat it too.