I wouldn't pay too much attention to the scaremongering below.
Given that the version of an OS that ships with a machine is generally an OEM version, the user technically is not supposed to install the OS on any other machine, so MS is just protecting it's rights.
As for transmitting details to MS, what do you think they do with it? Identity Theft? Tracking all your activity?
On Windows Defender, I've been using this software (and it's predecessor) for over 3 years on a large selection of machines without any problems. It certainly has never removed or interfered with any other anti virus, anti spyware products, firewalls on the machines.