TouchArcade’s Eli Hodapp has an anonymously sourced article from a free-to-play game developer:
You might not use Facebook, but your connections give you away. If you play with friends, or you have a significant other who plays, we can see the same IP address, and learn who you are playing with. When we don’t know information, we try to gather it in a game. Have you played a game with different country flags? We use those to not only appeal to your nationalistic pride, but to figure out where you are (or where you identify). Your IP address says you are in America, but you buy virtual items featuring the flag of another country, we can start to figure out if you are on vacation, or immigrated. Perhaps English is not your first language. We use all of this to send you personalized Push Notifications, and show you store specials and items we think you will want.
And if you are a whale, we take Facebook stalking to a whole new level. You spend enough money, we will friend you. Not officially, but with a fake account. Maybe it’s a hot girl who shows too much cleavage? That’s us. We learned as much before friending you, but once you let us in, we have the keys to the kingdom. We will use everything to figure out how to sell to you. I remember we had a whale in one game that loved American Football despite living in Saudi Arabia. We built several custom virtual items in both his favorite team colors and their opponents, just to sell to this one guy. You better believe he bought them. And these are just vanity items. We will flat out adjust a game to make it behave just like it did last time the person bought IAP. Was a level too hard? Well now they are all that same difficulty.
I’ve seen plenty of bad things in free-to-play games to anecdotally support the anonymous developer in the article above. For example, players earning premium in-game currency through offers that require their social security number and other extremely personal information that nobody should be asking for. The analytics function to dehumanize people playing the game, remove any chance the game had at being legitimately enjoyable without spending more and more money, and churn through players and their cash until the game is no longer profitable for the developer to operate. At this point it will be shut down as ungracefully as possible in order to move players on to the next game and the cycle repeats.