Managing personal Outlook.com account settings, security, and privacy
My view is that Microsoft are trying to do a YouTube, whereby what was once a straight free service is now so infested with ads that presumably enough users get fed up and succumb to buying ad-free YouTube Premium (the woman who set that up is now worth around 600 m USD). Since Microsoft presumably can't change the terms of the free Hotmail to which we all signed up, it appears that they are trying to squeeze/scare users into buying storage by the methods you described. Which may be illegal, certainly unethical, and I am going to try to prove that. If I have results will post them on this site.
I emailed Microsoft CEO Clare Barclay (claredotbarclayatmicrosoftdotcom - if I write the address normally it will be deleted). She lacked the elementary good manners to reply to me, obviously considering that I am insufficiently important to matter. Instead I got a brush-off from Angelica Leng (Escalations Dept). Who then in a second email told me that my questions were now 'archived' (closed). The problem for Microsoft is that they can't actually answer my questions honestly because it would reveal their wrong doing. Good luck.