You cannot use the new Outlook app without syncing these data with Microsoft's servers, i.e. your usernames and passwords are sent to the company's cloud servers. While the data is sent using TLS, the IMAP and SMTP username and password are sent to Microsoft in plain text. This could allow the company to access your emails, and share the data with third-parties.
Not only that, but sending usernames and passwords in plaintext allows for MITM attacks.
I think outlook iOS has been storing credentials on server since day one, even before it was acquired by Microsoft. I’m not sure what the new outlook app means.
“Our automated systems analyze your content (including emails) to provide you personally relevant product features, such as customized search results, tailored advertising, and spam and malware detection. This analysis occurs as the content is sent, received, and when it is stored.”
As said, they read and analyze your mail, mainly to sell it to advertizing companies. Google make money with this.
It's quite good value, especially the 2-year plan, if you actually use all the stuff they offer. I got my family there, but they are still not to eager to integrate all there is into their routines.
Sending plain-text passwords is rather interesting, tho. Could've at least optionally encrypted 'em with a key derived from smth known by the user only.
So obviously not to everyone's taste but if you have access to iCloud+ email, your mail isn’t scanned for sale (as per their US privacy agreement anyway), you get randomized email addresses available to give to places that you think might be spammy and you can link a domain to your account, although you’re only allowed 3 email boxes per user in your family per domain. Works well for me so far. Mind you because of photo storage size and devices backups I’m up to $3/ month from the original $1/month when I started.
Plus with Advanced Data Protection a lot of iCloud info is E2E encrypted. (Not email tho.)
I think your first point totally valid and justified, though the second is a little more nuanced, including Proton Mail making promotional mileage out of some genuine privacy and potentially security related concerns.