MS has their privacy policy listed. You can read it and decide if it’s acceptable.
I use a Synology NAS for the type of services you’re talking about. Their apps have some quirks but for the most part work. It costs me about the same as an m365 subscription to pay for a backup service, which if you think about it you should be backing up your m365 data too.
If you have a place to keep a NAS powered and don’t mind managing your own hardware then it’s a decent option.
TLDs are a scam.