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You're mistaking a technical process for a legal one. The fact is, legally that dosn't matter, it's advertised as a feature of the Xbox 360. That is then, in UK law, precisely what it is. Indeed, there is actually a good legal argument for nulling the entirety of the Live EULA on those grounds. (As you don't agree to the EULA when you purchase it, and a second contract to use part of the features risks failing the test of fairness)
And there are such things as consumer rights, which all companies should respect. Companies which engage in activity like selling customer addresses to open email lists used by spammers, which you'd respect per your statement, cannot and should not be tolerated. Trust and taking part in the social contract are important elements of running a network.
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