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Andrew Nicol is an attorney based in New York City. He was previously a corporate associate at Cravath, Swaine & Moore LLP and now runs Clickwrapped, an online report that reviews and scores leading consumer websites according to how well they respect the rights of their users. He is a graduate of Harvard Law School. You can follow him on Twitter at @aknicol.

Last night, Microsoft began notifying the users of its online services (including Bing, Hotmail, MSN and Office.com) about changes to the Microsoft Services Agreement. A cursory glance at the announcement email might make it seem like all that’s happened is some innocent redrafting — Microsoft says that they’ve “modified the agreement to make it easier to read and understand” by introducing a “question and answer format”. But take care. There are two key changes — and they are both bad for users.

1. Microsoft can share your content between its services

The previous version of the agreement allowed Microsoft to use your content “solely to the extent necessary to provide the service”. The revised agreement allows Microsoft to use your content to “provide, protect and improve” all “Microsoft products and services”. This means, for example, that your Hotmail messages or Office.com documents could be displayed in Bing search results. In the announcement email, Microsoft alludes to this change. It says that its “cloud services” are being designed “to be highly integrated across many Microsoft products”.

Microsoft is not alone in allowing data sharing across its various products. Google’s terms of service contains a similar clause. Big data is becoming big business, and Microsoft probably thinks that it needs to be on an equal footing with its competitors in being able to use customer data across its entire spectrum of cloud services. But this change has substantial privacy implications. It means that personal information that previously could only be used for the limited purpose of providing a single service can now be shared throughout the Microsoft corporate structure. 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?

2. You no longer have a right to sue Microsoft in court

Microsoft is now the latest of a growing number of companies (including Netflix and PayPal) that requires its users to resolve any disputes with the company by binding arbitration. This means that you give up your right to sue Microsoft in court. You also give up your right to bring a class action suit. Mandatory arbitration is dangerous because most consumers think that if they have a dispute with a merchant, they will have access to the judicial system and all of its rights and protections, such as bringing a class action, having their case heard by a judge, and the right to appeal. These rights do not exist in arbitration proceedings.

The updated terms take effect on October 19, and you are deemed to agree to them if you continue to use Microsoft services after that date.

Photo: James Pikover/VentureBeat

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