Automatic metrics are only one tool in a toolbox that includes focus testing and design aesthetic.
But if a whole subset of users exclude themselves from that tool, they're going to get the UX that's only as good as the other tools in the toolbox are capable of building.
Definitely, and it continues to exist after as well.
But telemetry gives web developers an extremely simple and convenient tool to know what users are actually doing without even inconveniencing the users with explicit questions. I've done web development with a good telemetry set built into a page, and it is extremely informative regarding how users actually use the tool, as opposed to how the UX designers have predicted flow through the tool will be.
To give a concrete example, a user might tell you that configuring permissions is "hard," and sitting with them during over the shoulder testing (which is expensive) might tell you a little bit about why. But without even asking the user, page telemetry can tell you that they are making a transition jump from the permissions configuration page to the page listing all of the resource names, because that's what's slowing them down---the UI didn't give them enough information to configure the resources because we assumed they knew what the resources were named.
For a browser, anonymized usage stats can tell you whether most users keep all their bookmarks flat at the top of the bookmark bar or deeply nested in multiple subfolders, and that's usually valuable for deciding whether you want to emphasize a flat bar or folder management in the design.
If most power users disable automatic anonymous telemetry and also use deeply-listed folders, no one should be surprised if deeply nested folders doesn't get better.
Yeah, invading people's privacy always makes things easier for everyone else, doesn't it? Doesn't mean people who care about it don't want or deserve quality...
"Deserve" is complicated. To a first approximation that ignores a lot of details... What have they done to "deserve" it? They didn't buy it. They aren't making the process of figuring out what they want particularly easy.
People who don't show up to vote also "deserve" a good government by virtue of being people who have to live in a governed society. It's harder to make one for them if the system for selecting leaders is missing their input, regardless of what they deserve.
Popping out of the government analogy and back to software, power users are also in a position where they are more capable of adjusting their experience to suit their needs. All things being equal, a company with finite resources to develop software should dedicate those resources to assisting the non-power users more often than power users.