But why wait for evidence when posting "Micro$oft is evil" is more fun?
But that’s not at all what they said. The argument they used applies to anyone collecting data. Just like in the example they used.
And while you are right about the privacy policy stating what the data is used for, what is there to prevent companies from changing their privacy policy at any point in time? And if they change it, are they required to inform you that the privacy policy has changed?
For Europeans there is the GDPR.
This is also one of the things that AFAIK should be covered by the GDPR (contrary to the cookie banners with opt out that I personally expect will get their punishments soon.)
VS Code seems to have driven a lot of improvement to features most important to users based on this data.