One of the main selling points of Kagi is privacy. It's featured on the main landing page, they have a page dedicated to it, and it's mentioned in pretty much every sales pitch they will make. Kagi's audience is also comprised of people who have that value as paying for a search engine means divesting from adtech surveillance.

So, it does not matter that "all search engines are problematic in terms of privacy"-- this one is marketed to not be. That's why people have concerns about how serious they're taking that committment and why people would hold them to a higher standard. It's also why a sale to a company which does not respect privacy is potentially a major issue, especially if current customer data isn't being handled in the manner they had expected.