> They said "the free services you use may be at risk".

This sounds more like a threat. "If you don't give us whatever data we want, for free, then we will cut you off from some of our online services as punishment.

> Given the context, I took that to mean the quality of the service would tank if they had to share their algorithm changes.

I see this argument from them all the time and honestly, I see very little evidence of it. I use DDG exclusively now but I used Google and DDG side by side for a while as I was transitioning over, and during that time I didn't see much variation in the quality of results. If anything, being in a filter bubble made it harder to find new information.