Q. Is this really as harmful as you think?
A. Go to your parents house, your grandparents house etc and look at their Windows PC, look at the installed software in the past year, and try to use the device. Run some antivirus scans. There’s no way this implementation doesn’t end in tears — there’s a reason there’s a trillion dollar security industry, and that most problems revolve around malware and endpoints.
Ultimately privacy is part of security so, if anything, everything you mentioned is just more reinforcements that this is a major security concern.
As someone that has been obsessed with tech since being a kid in the 90s I think the tech side of this is super cool and very exciting stuff. As a user, though, I only like this if I’m the one implementing and using it. I do not trust a mega corporation (or really any company) to “leave it locally on my computer and totally not use that data for other purposes”. Right now it’s supposed to be (as far as I last heard) only on your machine but we’ve seen EULAs and TOS’ etc change many times over the years but especially over more recent years as data continues to be king and data like this is a literal bottomless diamond mine.
I know this isn’t your point but it’s just worries I have in addition to your points. And let’s not even start about what this means for law enforcement abuse. No thanks, I’ll wait for a FOSS equivalent that at least gives me and the community the opportunity to evaluate how it works.