Updated, 3/29/2018, 2:25pm PT:

Microsoft clarified some of the issues for us and said that "Microsoft agents do not watch or listen to your Skype call." However, the company didn't clarify whether or not software or machine learning algorithms are used to monitor Skype calls or other services in real-time for Service Agreement violations.

The company did mention that it "responds to customer reports of inappropriate content" and then it asks for evidence of another user's conduct before investigating the claim.

Microsoft didn't respond to questions about what it believes to constitute "offensive language," and how it determines when someone's account should be suspended or banned. The company also didn't reply to questions about what prompted these recent changes in its Service Agreement.

A Microsoft's spokesperson also gave us the following statement:

We are committed to providing our customers with safe and secure experiences while using our services. The recent changes to the Microsoft Service Agreement’s Code of Conduct provide transparency on how we respond to customer reports of inappropriate public content.

Original, 3/29/2018, 2:15pm, PT:

In an update to the Microsoft Services Agreement, which will go into effect on May 1, Microsoft prohibited “offensive language” and fraudulent activity, among other things. The company will suspend or ban users from participating in its Xbox Services, and if found violating its rules, the users will forfeit their account balances, any content licenses they may own, and their Xbox Gold Membership time if they run afoul of these new rules.

Banning Users For “Offensive Language”

Microsoft’s own summary of the changes in the Microsoft Services Agreement included the following section:

In the Code of Conduct section, we’ve clarified that use of offensive language and fraudulent activity is prohibited. We’ve also clarified that violation of the Code of Conduct through Xbox Services may result in suspensions or bans from participation in Xbox Services, including forfeiture of content licenses, Xbox Gold Membership time, and Microsoft account balances associated with the account.

In the full text of the agreement, Microsoft included the following paragraph, to which the above paragraph refers:

Don’t publicly display or use the Services to share inappropriate content or material (involving, for example, nudity, bestiality, pornography, offensive language, graphic violence, or criminal activity).

It’s not clear what the company means exactly by “offensive language” here, but presumably the company owns a list of arbitrary words it has chosen to reflect what it considers to be “offensive language.”

It’s also not clear how the company intends to monitor such violations, on Skype or any other of its services. Would the company use machine learning to monitor everyone’s conversations in real-time to identify that “offensive language”? Will it do the same for audio calls and video calls?

Alternatively, the company may simply wait for other users to flag such content before it takes any action. It's not clear--and that's the problem.

Who Does The New Terms Target?

The company’s primary target may be people who tend to say offensive things when playing Xbox Live games with others. Still, the new Service Agreement encompasses all of the company’s services, not just the Xbox services, so in theory Microsoft could use the same terms for more proactive banning on other services, too.

One of the issues with banning of accounts, especially if the violation isn’t too severe, is that such action could represent a major disruption to a user’s life.

For instance, Microsoft has been encouraging users to use Microsoft accounts to log-in to Windows instead of using local accounts. It has also encouraged users to encrypt their laptops using the same Microsoft accounts, where the keys are stored by default. Those keys can’t be recovered without the Microsoft account, so the user would no longer have access to the laptop’s data if the account was banned. The same user may also be using Outlook and Office 365 with their main Microsoft account, too.

This is one of the main downsides of being inside a single corporation’s “ecosystem”. If that particular company ever has any reason to ban your account, you could lose access to significant portions of your personal and work data. This applies not just to Microsoft, but also Google and Apple, all of which have been trying to lock users into their own ever-expanding ecosystems.

We’ve asked Microsoft to clarify what these new terms mean, how the company intends to monitor the potential violations, and how it will take enforcement action against those that break its rules. We’ll update the post as soon as the company responds to our questions.