Wait, no, that doesn't sound right. From the way Apple describes this they are accessing all your info, plus extracting context from it. So not only does it know people's faces, who sent you what when, the content of every image on your device and every message you sent or received, but it knows which people are related to you and how, where you are and a bunch of other stuff.
Plus there are other issues on the Apple side where it compares worse in terms of privacy. As far as I can tell this doesn't have an opt-out, right? And they do send the data to Apple servers for processing (but don't store it), which the MS version doesn't do at all. It seems like they each have ways in which they're worse than the other privacy-wise, although presumably the only actually secure option between the two would be Windows with Recall turned off, unless Apple do have an opt-out they're not talking about.
Ultimately, like I've been telling everyone, the interesting bit here is how the presentation of each of them and the branding and positioning of each brand alter the outcome. Both MS and Apple are arguing the same thing: that your data is secure because their system is secure and your data remains local or at least under your control. But one of them did not pay any mind to presenting security as a concern and will only ship some common sense additional security in response to pushback while the others will ship something very similar but reassuring you in a calm voice that this is all very private even if it's flying through the ether to an Apple server. So one is "a security and privacy nightmare" and the other one... well, if you have your nudes just sitting in your personal device you're really just asking for it, you know?
That is the kind of understanding of marketing that separates Apple from MS, if you ask me. A whole master class in branding right there. I'll go one further: Based on what I'm reading about this, I suspect if MS had announced their bad, unencrypted leaky version today, after the Apple presentation they would have seen less angry pushback because Apple's good messaging would have smoothed things over for both.