Document telemetry collection and opt-out steps

README.md

@@ -12,6 +12,31 @@ To [file an issue](https://github.com/microsoft/terminal/issues) or [contribute
 
 **Thank you for your contributions!!!**
 
+## Data Collection and Telemetry
+
+Windows Terminal collects usage data and sends it to Microsoft to help improve the product. This telemetry data helps us understand how the Terminal is being used and identify areas for improvement. The data collected is subject to the [Microsoft Privacy Statement](https://privacy.microsoft.com/privacystatement).
+
+### What data is collected?
+
+The data collected includes information such as:
+- Feature usage and performance metrics
+- Crash and error reports
+- Configurations and settings (in aggregate form)
+
+This data is anonymized and does not include personal information or the content of your terminal sessions.
+
+### How to disable telemetry
+
+Telemetry collection in Windows Terminal is controlled by the Windows diagnostic data settings. To disable telemetry data collection:
+
+1. Open **Settings** in Windows
+2. Go to **Privacy & security** > **Diagnostics & feedback**
+3. Set **Diagnostic data** to **Required diagnostic data** (the minimum setting)
+
+Alternatively, you can completely disable diagnostic data collection on Windows, which will also disable telemetry for Windows Terminal. For more information about managing diagnostic data in Windows, see [Diagnostics, feedback, and privacy in Windows](https://support.microsoft.com/windows/diagnostics-feedback-and-privacy-in-windows-28808a2b-a31b-dd73-dcd3-4559a5199319).
+
+For more information about data collection and privacy, please review the [Microsoft Privacy Statement](https://privacy.microsoft.com/privacystatement).
+
 ## Microsoft Open Source Code of Conduct
 This project has adopted the [Microsoft Open Source Code of Conduct](https://opensource.microsoft.com/codeofconduct/).
 For more information see the [Code of Conduct FAQ](https://opensource.microsoft.com/codeofconduct/faq/) or contact [[email protected]](mailto:[email protected]) with any additional questions or comments.

TerminalDocs/faq.yml

@@ -154,3 +154,19 @@ sections:
               "dark": "One Half Dark",
           },
           ```
+
+      - question: How do I disable telemetry collection on Windows Terminal?
+        answer: |
+          Windows Terminal collects usage data and sends it to Microsoft to help improve the product. Telemetry collection is controlled by the Windows diagnostic data settings.
+
+          To disable telemetry data collection:
+
+          1. Open **Settings** in Windows
+          2. Go to **Privacy & security** > **Diagnostics & feedback**
+          3. Set **Diagnostic data** to **Required diagnostic data** (the minimum setting)
+
+          Alternatively, you can completely disable diagnostic data collection on Windows, which will also disable telemetry for Windows Terminal.
+
+          For more information about managing diagnostic data in Windows, see [Diagnostics, feedback, and privacy in Windows](https://support.microsoft.com/windows/diagnostics-feedback-and-privacy-in-windows-28808a2b-a31b-dd73-dcd3-4559a5199319).
+
+          The data collected is subject to the [Microsoft Privacy Statement](https://privacy.microsoft.com/privacystatement). For more details about data collection in Windows Terminal, see the [Data Collection and Telemetry section in the product repository README](https://github.com/MicrosoftDocs/terminal#data-collection-and-telemetry).

TerminalDocs/troubleshooting.md

@@ -157,6 +157,10 @@ set bell-style none
 
 Press Ctrl + O and Ctrl + X to save and exit.
 
+## Data collection and telemetry
+
+Windows Terminal collects usage data to help improve the product. For information about what data is collected and how to disable telemetry, see the [Data Collection and Telemetry section in the README](https://github.com/MicrosoftDocs/terminal#data-collection-and-telemetry) or refer to the FAQ page for instructions on disabling telemetry.
+
 ## How do I reset my settings in Windows Terminal back to the default settings?
 
 To reset your settings back to the original default settings, delete your [settings.json file](./install.md#settings-json-file). This action causes Windows Terminal to regenerate a `settings.json` file with the original default settings.