John T
I reckon it's very unlikely that MS will start charging a yearly fee for Windows. That would leave them in the fairly impossible position of having the only mass market operating system that wasn't free.
They have announced that some time ago, so that probably will come.
As OP has correctly mentioned, they are already bound Windows to the hardware. So as a normal user you can not upgrade your PC without sending (ridiculous!) money to MS. I think "subscription" model will be accepted by most users, you can upgrade PC again, probably "home" package (several home computers) will have special price. They have big experience with Office 365, they know what they are doing.
Note that is not going to affect corporate market, they have (and will have) site wide licenses. Small PC building companies are happy now and will be happy with subscription. End users are forced to buy complete PCs instead of upgrades. With subscription, I guess the price of Windows 365 is going to be rather small for them, so "initial price" will be more attractive.
One example:
* you can buy Intel TV stick with Window 10 for 120 €
* official Windows 10 (not OEM) for upgraded/self build PC is 135,00 €
Does it make sense? But they are doing that, already now.
With "Spy" function I disagree. They have no reason to spy, they want to collect some info but you can switch that off. All "passwords & co" information is for sharing between YOUR devices, Google/Apple are doing that. And many people are happy (system restore without explicit backup, etc.). But again, you can switch that off.
With all respect to Linux (I am working with it full time), the experience for end users can not be compared with Windows 10... Linux can become "dangerous" for OS X, but MS is going its own route and till now they was always successful.