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Originally Posted by CWatkinsNash
That particular part of the agreement pertains to MS services, and is referring to counterfeit versions of MS software and games. It also refers to counterfeit controllers, presumably due to people using modified hardware to get around cheat checks in online games. I certainly don't have a problem with MS going after pirated versions of their own software. They've been incredibly "generous" in the past, what with people happily running pirated Windows for years, despite MS knowing about it.
Similarly, the oft-loudly-cited section regarding access to all of your files pertains to using the OneDrive feature that allows you to remotely access all of your files, rather than just those in the cloud.
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The way I heard it, it relates to XBOX hacking, which requires a PC to carry out in many cases.