Agreed. This was raised within our corp the other week and we read through the privacy and security documentation as it relates to Connected Experiences.
Microsoft has outlined specifically what Connected Experiences covers.[1] [2]
You could argue that predictive text is a product of machine learning but there is no clause allowing for training any generalized large language models using this data. The confusion may have arisen, if they read an article about CoPilot. If the user had a Microsoft Copilot 365 license, then the data would be used as grounding for their personal interaction with CoPilot. But still not used to train any foundational LLMs.
However, even this data is still managed in compliance with Microsoft's data security and privacy agreements.
[1] https://learn.microsoft.com/en-us/microsoft-365-apps/privacy...
[2] https://learn.microsoft.com/en-us/microsoft-365-apps/privacy...