Yes. Although children’s data is protected under UK law and Microsoft provides information on revoking consent for the company to handle the data of the children you’re responsible for, signing kids up for an online service always means that someone – Microsoft in this case – will have access to the data they generate. However, Family Safety means that you’ll be better able to manage your kids’ interacting with the online services they already use, making it a net benefit once the children in your care are old enough to have Microsoft accounts anyway.