So, the argument goes, "Well, if you have nothing to hide then there's no problem." And that's kinda true but .... I dunno ... I guess it's a topic that could be discussed for hours. I'm not worried about Microsoft stealing my data so I use Windows 11. If or when I become concerned I'll put sensitive files into an encrypted container to take care of the most sensitive stuff.
You can create an encrypted container and put anything you don't want Microsoft seeing in that. I have used TrueCrypt/VeraCrypt for years. I also use Microsoft's own Bit-Locker for encrypted partitions.
But everything I would put into an encrypted container is not to hide from government. It's to hide from everybody like credit card info, stuff that only I should know.
Microsoft says telemetry data is only for improving the OS and contains no personally identifiable information as well. So, there's not much to worry about there. And if they ever got caught lying it would make their credibility look pretty sad so they are probably telling the truth.
