I appreciate your point, I really do, but I think that ship has sailed a long time ago. Your password to that website? If the website is popular and has some financial value, its on the shortlist too. They're not only going after microsoft cloud servers. Yes, a central location makes it easier to get a large dataset, but then again, penetrating some random e-commerse website is way easier than hacking microsofts cloud servers. Your personal data and billing info is already in tons of places, and all those places - are not using the best security engineers to secure it. Your documents? Well unless you're not sending those documents out, they're already on the cloud in some form, everytime you email them to someone, or hand them on a usb drive. The network effects of this are so strong that its simply impossible to escape any of this. Without regulation, there is little chance of reversing these worldwide trends.
>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.
>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?
Do any businesses exist that you can apply this guarantee to?