Yep the average person tends to prioritise ease of use and simplicity over privacy and most people are willing to give up the privacy for this. Although, the more obvious and in or face the privacy lose comes the less likely they are to go for it. If I went up to a person in real life and said "give me a copy of your government ID and I will perform X service" most people are unlikely to hand over the ID.

If the phones get marketed well enough, people might corelate digital and physical privacy losses

The average people do care about privacy, they just either prioritise ease of use, can't corelate digital privacy with physical privacy or simply are unaware. If google flashed in big text on the account creation screen the important thing in their privacy policy instead of hiding it, I believe you would have fewer google account creations