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"There are monsters." Not just the services themselves, but real sick people who want nothing more than to hurt others; whether for financial gain or purely for pleasure makes no difference to how it affects you.
Services owning your data isn't the endgame. It doesn't get locked in an inaccessible vault as much as they want to make it seem that way. Ownership is just the beginning.
2a. Here's a list of websites who have had users' data hacked.
2b. Sometimes companies get bought out, or go under, or just need a little extra cash on the side. And that's when the users' data turns into a financial asset that gets sold to the highest bidder. And usually that bidder is just a data broker who sells it to other companies for advertising or for more brokering... And on it goes down the chain until it's either being sold by people who aren't vetting their customers and are selling it for very cheap; or one of the many links in the chain gets hacked. Either way it all gets back to point 1.
Yes, services are highly likely to report users. There's no requirement, legally, unless it pertains to a specific investigation, but tech companies in the US famously love to comply with law enforcement and the NSA and the DOD and DHS and really any other agency that asks. Many other governments love to be as nosey about what their citizens do online
It's not just about what's illegal, it's also about what could be made illegal. If that sounds paranoid, try asking women in states that have made abortion a felony why the won't use period tracking apps. Or ask trans people in Texas why they won't share personally identifying information online. Hell, a month ago "Deny, Defend, Depose" was little more than a nonsense phrase, now it's enough to get you thrown in jail for threats to commit terrorism; what posts are you willing to have taken out of context and combed for phrases the next domestic terrorist used in their manifesto?
I guess that's my biggest issue: what you don't know can harm you, so why is the default action to lay back and let the rest of the internet do whatever they want with your personal information? Why is the question "why should I care what they do" and not "why do they want it so badly"?