There's two problems with this statement. First is the assumption that students don't care about privacy, second is the lack of discussion about consent.
I'm a student who takes special care about the software I install on my laptop. I use a Linux distro, run primarily open-source software, and sandbox every single proprietary app (limited access to files, no admin at all, no screen recording, disabled webcam, ...). I've also looked into several of these exam spyware tools (you really are forcing students to install spyware), and they're built with often hilariously poor security practices.
Which is to say nothing of the regularly stolen source code; If you held the exam spyware solutions to the same standards that you held students to, you would write up almost every single vendor to the Academic Integrity office. Another example of hypocrisy in academia from the perspective of a disgruntled student.
I deliberately do not install any video games with invasive anti-cheating functionality (and I regularly critique them, like I do for exam spyware); that is a false equivalence anyway, since they don't deal in the same breadth of personally identifiable information (like a permanently saved panorama of my bedroom).
Don't assume all students are the same.
Second, the consent dynamics are wildly different. For a game, its like "you trade this in for fun/relaxation" - and there's always other games that don't spy on you. I play those. With universities, many pulled a fast one and introduced the spyware to students after their tuition is already paid, and said "use it or drop the course". You can't switch universities because one university didn't consider the ethics of spyware; you can switch games much more easily.
