Although I'm not particularly confident in MS's security competence (judging by Windows' security track record), I don't think the main issue people take with this data collection is related to breaches by outside entities. At least in my case, it's not.
What I take issue with is the same as for Google et al.: I find it creepy and don't want MS (or Goog / Apple / etc) to keep tabs on me, on what I do, and to try to find a way to make me buy more random crap with their ads.
I'm also uncomfortable with the avenues this opens for State-level surveillance and the use of wonky "IA" to check on whether I'm doing anything "illegal" on my device. Cf the guy whose Google account got suspended for sending pictures of his son to a doctor.
I don't care if it's secure. It's my data, not yours. You have no business hoarding it in the first place.
If I take copy of your diary without your permission and pinky-swear that I won't share it with anyone else, does that make it right?
Why do tech companies have such a hard time just doing the right thing?
Well, and it's also some of the richest user datasets. Google is doing it. Apple is doing it. Amazon is doing. So why not MS? It's not like we have hard privacy laws in this country!
"Oh, only 1% of users are hitting this one!" (Reduce priority, ignore, automatically close for "zero bug bounce")
And they remove necessary features then lie, "Our telemetry suggests that people don't use those features."