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Again, it just doesn't matter as even though it's listed you have to sign up for it and create an account and you have to agree to the EULA as part of that process.
So there's no legal issues there--at least not in the US--I can't speak for other countries. But again, if there were huge issues anywhere there would be a bigger stink over other than just nerds whining in forums. MS is a big company, if there were legal issues there would be lawsuits, and media coverage of outraged consumers etc.
It's just a non-issue for most as it's in the EULA and the majority of people aren't modding their consoles.
People just go to far. Consumers rights is one thing. But it's another to be totally anti-corporation and not think that companies should have pretty broad rights in who they let on their networks etc. There needs to be a happy medium--EULAs should be reasonable, and it seems like MS's largely is aside from potentially banning some people who maybe didn't mod their consoles--though I'm skeptical of that claim without seeing more than whining on message boards. I don't care if people modded them for non-piracy reasons. The policy is no modding--stick by it or don't buy an x-box if you want access to the online stuff--and get a PS3 instead. The bulk of good games are on both these days anyway.
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