Yes, that is an overreaction. In my opinion, you should take your privacy precautions as far as you wish without significantly affecting your everyday life. Refusing to use your smartphone/not enjoying the experience because you are anxious about the data it is leaking suggests to me that you've gone too far down the rabbit hole and need to pull back a bit. There are measures you can take to increase the privacy of your smartphone, even if you can't install an alternative operating system on it and need to use default Android. No it won't be as private, but if the alternative is selling/returning this new gift then perhaps sacrificing some of your privacy is worth it (that's something for you to decide).

The reality is that most people around the world have absolutely zero concern for their privacy and security and get by in life without any issues at all. It's good to be informed and take precautions where necessary but it is statistically extremely unlikely that you will notice any negative change to your life because you choose to use a regular smartphone. Making choices about your privacy should come from a place of empowerment - you should feel good about them. If you are making choices because you are scared/paranoid, you probably need to take a step back from online communities such as this one. They can be useful sources of information but you can also get easily overwhelmed with information and/or try to change too much, too quickly and end up living and extremely paranoid and limited life. People who do this often then burn out and just give up entirely on their privacy, when a more moderate approach would have actually benefited them more long-term.