There's been so much talk about built in spyware its crazy
If you read the Microsoft Privacy Statement thoroughly, you should be either scared or illiterate.
The first chapter says they collect your first and last name, email address, postal address, phone number, passwords, password hints, age, gender, country and preferred language, interests and favorites, payment data (such as a credit card number), and the security code, the features you use, the items you purchase, the web pages you visit, and the search terms you enter, IP address, device identifiers, regional and language settings, data about the network, operating system, browser, contacts and relationships, location, the content of your documents, photos, music or video, the subject line and body of an email, text or other content of an instant message, audio and video recording of a video message, and audio recording and transcript of a voice message you receive or a text message you dictate, phone conversations or chat sessions with our representatives... This all is a direct quote from the first chapter.
The second chapter is even more frightening: They'll use the data mentioned above (1) to operate their business and provide (including improving and personalizing) the services we offer, (2) to send communications, including promotional communications, and (3) to display advertising. The two first ones are fairly acceptable, but the third one includes help selecting the ads Microsoft delivers - whether on our own services or on
services offered by third parties. Who are they? Do I/you want them to know all the information mentioned above?
Then again, you're right about the craziness about the hype for spyware/adware. There's so much talk about all kinds of malware lurking everywhere that people really don't know what to think or do. They either get neurotic or unconcerned about it. The first group usually behaves in a way they'll most likely never catch anything, the latter group providing a free playground for all kind of foes.