There is also the practicality angle. If apps were listening in on all the random bullshit conversations people have, that would be such an unbelievable crapton of data to sift through, it would simply be uneconomical even if possible, just to show you an ad for cat food that will pay out like one cent IF someone clicked on it?

As for the lab grown diamonds thing, there is a real possibility that it went exactly the other way around. The ads didn’t get shown because they talked about it, but they talked about is because of the ads. We see ads all the time to the point we’re no longer consciously aware of them. Obviously, they still influence our behavior or companies wouldn’t spend a fortune on them. So a lab grown diamond company is running an ad campaign on FB. Someone sees that ad and it doesn’t consciously register, but it plants the idea of lab grown diamonds in their head. Then this causes them to bring it up in a conversation later. Now consciously aware of the concept, you suddenly notice the ad you ignored earlier.

IMO, this is a much more realistic and even scarier scenario than apps listening in. It’s apps manipulating your unconscious thoughts.