Microsoft Corporation (MSFT) Affecting Your Rights?

Microsoft Corporation (NASDAQ:MSFT) has recently gotten some news about making the legal documentation of Windows 8 easy to use and read for everyone, making it very clear about what users can or cannot do with the operating system.  Well, now Microsoft notified users of its online services (Hotmail, Bing, Office.com, etc.) that is had made changes to its Terms of Service, simply stating that it was making the language easier to read and understand by putting it in a Q-and-A format.

It turns out, according to a New York City attorney who monitors consumer web sites for their protection of users’ rights, read the new Microsoft Corporation (NASDAQ:MSFT) Terms of Service and noticed a couple of key changes – more than just the plain language, he means. He claims that the new terms affects users’ rights more than the previous agreement – legalese aside.

The first noteworthy change, Andrew Nicol notes, is that Microsoft Corporation (NASDAQ:MSFT) now follows in the footsteps of Google Inc. (NASDAQ:GOOG) in sharing all user content across all services. In previous agreements, Microsoft would only content in such a way to allow for use of the various services (like your username and e-mail to log in). Now, though, this means that virtually anything you have on any Microsoft service can be shared. In his example, Hotmail e-mail messages or Office.com documents could be displayed in a Bing search.

“(T)his change has substantial privacy implications,” Nicol wrote. “Your data could ultimately be used for something that has no relationship at all to the purpose for which you provided it. For example, people are now mostly comfortable with the idea of Google scanning your email in order to display relevant search results in Gmail. But what if Microsoft started scanning your Office documents and displaying related ads in your Bing searches?”

The second noteworthy change Nicol saw is that users no longer would have the right to sue Microsoft Corporation (NASDAQ:MSFT) in court. Any disputes with Microsoft regarding its services would now go to binding arbitration, which continues a trend that companies like Netflix and PayPal have recently instituted. Many rights and protections granted to a user in a court proceeding do not exist in arbitration.

The new Terms of Service goes into effect in mid-October, and users must consent to the agreement before continuing to use the services after that time. How these changes will affect the number of users of Microsoft Corporation (NASDAQ:MSFT) services is unknown, but investors – like hedge-fund manager David Einhorn of Greenlight Capital – may certainly watch for this in the coming months.