There's some truth in what you say. However svchost.exe very buggy service. Generally Windows 98 - 10 very buggy operating system. Free updates are made for sale of their applications in a market. Not for espionage. They were tired that Russians use only the hacked software. Though it didn't help them again. All spy and on all. But I don't think that simple people are interesting to them.
I am not updated. Because it is necessary to change iron. It is just the market. As soon as you were updated. Buy a new computer. Games issue are obviously connected with new video cards. Though old video card not than not worse.
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Good points, also I'm very clear that they are not spying trying to take your privacy away, they are doing it as a part of their new business model, they are shifting their focus away from OS, they are expanding.