Take time out of the equation. Microsoft is paying you rewards points for completing activities. You can use those rewards points; to buy items on their rewards store. You'd be hard pressed to describe Exchanging effort for compensation and trading that compensation for goods and services as free. You can talk about critical thinking when you understand what free is.
It's all an edge case or it wouldn't be offered. And yes, using the Bing app on your phone is an edge case. And I'd also venture to guess that most Rewards Points users aren't using it on the Xbox ecosystem and are buying Taco Bell or an Amazon gift card instead. The vast, vast majority of people don't take advantage $1 upgrade more than once, Microsoft rewards points, stackable PS+ subscriptions, etc. In fact the opposite is true. Most people are paying full price for these services, you know the very thing you are arguing against. It's why the $1 upgrade is offered in the first place as it flags the account for auto-renew and most people don't pay attention. Set it and forget it are the ideal customers for subscription services and why almost every one of them have auto renew turned on by default.