As an FB Marketing API developer, this has been available for several years . The way it works, advertisers can send their phone list to FB for ad targeting. However, phone hashes are sent, not clear ones.
Personally, as long as the user has an opt-out and opt-in options, I don’t think ad targeting is necessarily an unethical pattern, the blurring lines of ads and recommendations would be actually a pattern that users might like. Would you rather use Netflix or Spotify without recommendation engine?