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Kinect for Xbox 360 was designed and built with strong privacy protections in place and the new Kinect will continue this commitment. We listen for the word 'Xbox on' and then switch on the machine, but we don't transmit personal data in any way, shape or form that could be personally identifiable to you, unless you explicitly opt into that.
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(Microsoft later denied that the Kinect would use information for targeted advertising.) But even then, the first Kinect was only enabled in specific situations, and didn't have an always-on listening mode.
Update: A Microsoft spokesperson responded to our inquiry with the following statement.
Still, compared to privacy concerns over a device like Google Glass, which doesn't actively listen to its surroundings at all times, the new Xbox could pose greater privacy implications — especially if the system, which many users will connect to the internet, is compromised remotely by a malicious actor.
"If I'm recording you, I have to stare at you — as a human being," Google Glass engineer Charles Mendis told The Verge when asked about Glass' privacy concerns.
The new Kinect is listening for a specific cue, like ‘Xbox on.’ We know our customers want and expect strong privacy protections to be built into our products, devices and services, and for companies to be responsible stewards of their data.
Microsoft has more than ten years of experience making privacy a top priority.