They've been getting so much goodwill for all the other great things they've been doing lately. It just seems downright foolish to squander all of that for a few extra basis points in their telemetry data from those rare few users who care about privacy but are forced to use Windows 10 anyways for whatever reason.
Those who care about privacy but do have a choice in OS will simply avoid Windows 10 altogether because of the mandatory telemetry, which is telemetry data that they wouldn't be getting anyways. A certain percentage of these people could be Windows 10 users if it weren't for the mandatory telemetry. Would they really rather have people using other OSes, than having them use Windows 10 without giving them telemetry data?
So many aspects of their position on this issue seems completely irrational to me.