You know actually this is great way for Microsoft for surveillance. Not all apps and there data was accessible to Microsoft, like some data were encrypted etc. No that they are taking screenshot they can directly run those screenshots through ML Models. ML Models Maybe on device but the output/metadata they produce might be sent to Microsoft. For example Microsoft might run Image-to-Text on device but all the text from output could be sent to Microsoft. Your data will remain on device but Microsoft will still know