Why do they need to modify the data? And why do they need to distribute it (assuming this is different from copying), and for that matter why do they need to use your source code?
Modify so they can change and update the code when you push revisions or use their web based editor. They need to distribute it so you or others you allow can clone it or view it online. They need to use your code so they can format .md files.
Do you truly think that Github does not do the same? Any service needs to modify your data on the backend for the good of the service, including copying it to multiple servers for backups and ensuring uptime during a server failure.
They do not need to distribute your code, i.e. making your repo public - this is part of their service and you grant them the right to do so when you make it public.
Do they need to use your source code - well not explicitly as such, but they do modify it when displaying it back to you - look at any source code page, it is modified source code.
This is all in the auspices of giving you a good service.
Furthermore, any fork network modifies your repo - it is all one repository. So in essence, you are modifying people's repos without them knowing.
Modify & Distribute: If someone wants to download a zip file of your repository, then you have give BitBucket the permission to modify the content (to produce the zip file) and distribute it (to send it to someone who wants it).
Use it: I'm not sure, maybe to do syntax highlighting, they need to use the source code with a syntax highlighting software.
Does content modification in legal speak really have the same strict meaning as we tend to imply? I just checked Instagram's Terms for example, and they have no mention of modification—though they obviously do compress and resize submitted images.
This makes me wonder if altering a sequence of bytes (for example, after conversion to a different format) is really a ‘modification’ if it still represents the same work.
Modify: things like the just-launched web editor will need to modify whatever data you originally uploaded. Distribute: git clone etc. Execute: scripts and so on, or even interpreting markup could be considered "using" a file in some contexts.
Maybe they want to store it in a compressed form
> distribute it
Making the code available for you or your collaborators is distributing it. How else would they do this?
Why not just email them with your concerns, if you actually really have some, and aren't just playing to the peanut gallery for karma.