"Recall screenshots are only linked to a specific user profile and Recall does not share them with other users, make them available for Microsoft to view, or use them for targeting advertisements. Screenshots are only available to the person whose profile was used to sign in to the device," Microsoft says.

It's conspicuous that this statement talks only about the raw screenshots, not any data derived from them (such as aggregated data, inferred data, or even just slightly reprocessed data). So Microsoft could do any minor reworking of the data and send it off to the cloud for their own purposes, while technically complying with the above.