I am reasonably convinced that Microsoft isn't snooping on me, not at a level of detail that would bother me anyway. I'm sure they have the tools to do so if they want, but I'm not an US citizen, not doing anything illegal, not involved in anything shady or uncomfortable for the US government or its allies (which includes my country, for that matter) -- I think it's unlikely enough that I'll ever be a target.
But.
Microsoft, and its cloud servers, are a really big target. It's the holy grail of ID theft. Do I trust Microsoft to safeguard my passwords, preferences and files against attacks, not just today, but over the next ten or twenty years, at a time when Windows isn't really the focus of their business anymore? I'm gonna say a pretty big no to that.
Even if I were convinced they had only good intentions (let's say they do) about this stuff, so did Yahoo, and LinkedIn, and Adobe and countless other vendors who eventually ended up with huge data breaches.
Do I have any guarantees that, twenty years from now, Microsoft's personal data storage systems won't give way, between budget cuts, incompetent management (twenty years is a long time, maybe Satya Nadella's successor is going to be worse than Steve Ballmer...), technical debt and increasing capabilities from malicious actors? Can I be sure that Microsoft is never going to lower their security standards? That they won't make any compromises that they aren't willing to do today, even, say, if they were on the verge of bankruptcy?
Granted, I have neither the budget, nor the security know-how that Microsoft does, but I'm not that big a target, either, nor do I store my data on systems that are accessible 24/7 from anywhere in the world. My passwords aren't too valuable -- for all the reasons that make me unimportant to Microsoft + a bunch of other ones (I'm not that rich, I'm not friends with any celebrity etc. etc.). The costs involved in getting access to my data remotely far outweigh any benefits -- which can't be said for Microsoft's treasure trove of personal data.