The average Facebook user has something akin to an unwritten social contract with the company: I use your product, and you serve ads against the data I’ve shared. Implicit to that is expected polite behavior, the idea that Facebook won’t abuse your data, or your trust. In this case, Facebook did both, using a user’s social graph against them, with intent to cause emotional duress.
This story keeps getting better and better. The real trick here is that Facebook did, in fact, have permission to do this. Explicit permission, in fact, which we all agreed to in the 10,000-word license agreement we all signed to use the service. That we didn't read it is on us, the users.
But that a license agreement we may have signed years ago grants permission for psychological manipulation flies in the face of ethical informed consent. It's legal, it's just not right.