The new changes in the Microsoft service agreement read thus:
"When you upload your content to the service, you agree that it may be used, modified, adapted, saved, reproduced, distributed and displayed to the extent necessary to protect you and provide, protect and improve Microsoft product and services."
The above statement clearly portrays that the company intends full access to users data and rights to serve ads based on the available information thereby. Microsoft is perhaps treading Google's path, which have reserved the rights to allow it share users data across its cloud offerings.
Further more, Microsoft new service agreement terms explicitly acknowledged:
"For example, we may occasionally use automated means to isolate information from emails, chats, or photos in order to help detect and protect against spam and malware, or to improve the services with new features that make them easier to use."
The new changes in Microsoft terms of service also bears on actual word-rendering under "Privacy", the old stance on "Privacy" stated, that "Microsoft may access and disclose information about you"; whereas under the new heading, it clearly reads, "Microsoft may access, disclose, or preserve information associated with your use of the services, including (without limitation) your personal information and content, or information Microsoft acquires about you through your use of the services".
Also effected are changes in the legal rights, especially as it concerns U.S. users, the new agreement reads: "If you live in the United States, section 10 contains a binding arbitration clause and class action waiver. It affects your rights about how to resolve any dispute with Microsoft".
What this statement means is that Microsoft cloud services users in the U.S. cannot sue the company by a class action lawsuit, that is, any legal dispute with Microsoft must be resolved before a neutral arbitrator.
The new Microsoft terms of service will take effect starting October 19, 2012. Therefore, any user who does not find the above information comfortable must have to do away with the service now or leave the rest to Microsoft's whims.