Except with a warrant, it's entirely legal (and has been for a long time) currently for a surveillance team to physically stalk you in areas with an expectation of privacy (TEMPEST, wiretaps, etc), and in public areas they don't even need a warrant (actually, in public areas, it's legal for anyone to stalk you - just ask celebrities about their paparazzi stalkers).
As best I can tell, from a surveillance standpoint what Microsoft is encouraging to become standardized is to apply the same level of legal rigor for wiretaps to facial recognition, which would be a significant step beyond matching legal standards for physical surveillance (which is as it should be, as there's a scaling potential with automated surveillance that needs to be kept in check beyond simply the legal limits of physical surveillance).
Microsoft's stance is a pretty good one "in a perfect world." The problem is that it isn't a perfect world, and we've already seen a good system of FISA courts established after the uncovered abuses from the 1975 Church committee turn into a revolving door for exponentially increased secret warrants for NSA surveillance, even to the point of that surveillance becoming available to local police forces.
What doesn't help is that Hollywood has already normalized a lot of surveillance tech so that most of the public assumes things are already legal/implemented in much broader ways than they are, so it's normalized the very idea of the surveillance state that we are growing into.
If anything, private corporate abuses of the technology is the only thing that will generate enough public outrage to lead to a generalized reform. Self-governance at a corporate level may seem good, but I suspect it will simply mitigate the necessary outrage.
The necessary conversation starter would be the ACLU running a personalized erectile dysfunction out-of-home display advertising campaign in Washington, DC. As long as that level of abuse is against the terms of use of the intermediate providers, it protects the less visible abuses of the technology.
Ironically, a "race to the bottom" is precisely what will result in the appropriate level of regulation - corporate self-governance will always be a half-measure that seems good on paper but leaves a lot of procedural loopholes for systemic abuses that go unnoticed for a very long time.