Reputation
Microsoft has a poor reputation and less trust with being ethical with this kind of information than their competitors. It doesn't really matter if that is the truth or not, that is the overwhelming perspective of pro and home consumers with Microsoft.
It isn't the consumer or pro-user's responsibility to grant Microsoft amnesty for their past perceived difficulties in this area, it is Microsoft's responsibility to rebuild that trust.
They do have a right to keep their eye on my data. How they respond to that is what shows the character of the company. I suspect most cloud based services notified of potentially infringing copyright material send a take-down notice to the offending party, allowing for a dispute process, *prior* to taking any action that would prevent that party access to their data. Microsoft's response and policy shows a contempt, disregard and distrust for their end users. That is a classic and critical difference between the approach of Microsoft with corporate IP issues and say, Google or Apple.
If Microsoft had gotten the early lead in digital music, do you think they ever would have used their leverage to force recording labels to remove DRM from digital music? I don't. I think Microsoft has a corporate culture that is content to let the consumers bear the burdens of unnecessary restrictions on their digital content.
If Bing were the leading search provider do you think Microsoft would fight so many subpoenas and other Government requests for information on users the way Google has over the last 10 years? No - Microsoft would partner with those agencies and provide that information immediately and without oversight.
This is Microsoft's reputation - and I think it is deserved. It illustrates a company that is out of touch with responding to consumer demand in almost the SAME way that the recording industry was out of touch with their consumer base. They need a revolution of corporate culture in Microsoft that places an emphasis on being customer oriented and customer advocates - instead of seeing customers as criminals and thugs that should simply be shaken down for every last cent in their pockets. Fairly or not, that is how Microsoft's corporate culture appears in comparison to their competitors, and someone at Microsoft should recognize this and take steps toward fixing the problem, while they've still got enough momentum to correct their direction.