Considering the power of three letter agencies in the USA and the complete unhingedness of the new administration, I would not trust anything to a contract.
Sure I am certain there is a possibility but unless you have airgapped your local instance and locked down your local network securely it does not really matter.
It’s cool to run things locally and it will get better as time goes on but for most use cases I don’t find it worth it. Everyone is different and folks that enjoy the idea of local network secure can run it locally.
Even a badly operated on-prem system has the advantage that if someone breaks in, they are taking a risk of getting caught. Whereas with Azure the TLAs could just hoover up everything there without high risk of customers finding out (assuming they can gag MS). Given the reporting about NSA's "collect everything" modus operandi this doesn't seem very far fetched.
They are eluding to it not being secure against state actors. The distrust in government isn’t novel to this discussion so it should come as no surprise on HN. There is also a general fear of censorship which should be held more toward the base model owners and not toward cloud providers. I still think doing this in the cloud makes more sense initially but I see the appeal for a home model that is decoupled from the wider ecosystem.
Privacy is worth very much though.