I would say the intent very much dictates the what and how of Telemetry as well. There's a huge difference between gathering data on feature usage of VSC vs e.g. slurping up the code from its users.
A lot of software lets you opt-out from Telemetry gathering when you install it. I would not think Spyware would do this.
And I feel like saying it's "only in the way collected data is used" really makes a small thing out of something that is very important.
There's a very big difference in doing something maliciously and doing it to genuinely try to make your software better!
Actually there are of course different levels of bad like in any other area of human endeavor. Many criminals who would happily break your car window to steal your laptop wouldn't kill you to sell your Kidneys.
Lots of spyware that wants to remain on one side of a less dramatic divide simply provides "options" for example in the installer that are opt in and vaguely defined that no sane individual fully understanding his options would opt for.
Such software isn't usually cryptolocking your family pictures instead its frequently grossly violating your privacy and selling your time and attention to third parties who in turn may opt to use this bought and paid for back door into your computer to waste your time or cryptolock your family pictures.
Here's a clue. If you have to make a feature opt out because nobody on earth would opt in given time and expertise sufficient to understand your offer then you are victimizing your user. I cannot think of a case where any data collection being anything other than opt in would be acceptable.
A lot of software lets you opt-out from Telemetry gathering when you install it. I would not think Spyware would do this.
And I feel like saying it's "only in the way collected data is used" really makes a small thing out of something that is very important. There's a very big difference in doing something maliciously and doing it to genuinely try to make your software better!