While we appreciate that Microsoft has made its online services agreement much easier to read, the update comes with a questionable addition: a shiny new mandatory binding arbitration clause with class action waiver. The clause states that you agree to settle any legal disputes (except intellectual property rights disputes) in either the small claims court in your county of residence or Microsoft’s, or through the arbitration procedure outlined in the agreement. Microsoft announced that this change was coming awhile back, and has already added similar language to its XBOX Live service.

Here’s Microsoft’s side of the story (from their blog):

When a customer in the United States has a dispute about a Microsoft product or service, many of our new user agreements will require that, if we can’t informally resolve the dispute, the customer bring the claim in small claims court or arbitration, but not as part of a class action lawsuit. Many companies have adopted this approach, which the U.S. Supreme Court permitted in a case it decided in 2011. We made this change to our terms of use for Xbox LIVE several months ago, and we will implement similar changes in user agreements for other products and services in the coming months as we roll out major licensing, hardware or software releases and updates.

We think this is the right approach for both Microsoft and our U.S. customers. Our policy gives Microsoft powerful incentives to resolve any dispute to the customer’s satisfaction before it gets to arbitration, and our arbitration provisions will be among the most generous in the country.

The Supreme Court decision that Microsoft refers to in this article is the imfamous AT&T vs Concepcion. Back in April, a study by Public Citizen found that following Concepcion, a growing number of companies — from banks to cable and satellite providers to video game producers — have inserted forced arbitration clauses into their contracts, and at least 76 possible viable lawsuits have been stopped dead in their tracks.
 

There is no way to opt-out of this change per the agreement:

Your use of the services after the date the change becomes effective will be your consent to the changed terms. If you do not agree to the changes, you must stop using the services and cancel any paid services by following the instructions in section 9.10. Otherwise, the new terms will apply to you.

The services affected by this agreement include: Microsoft Hotmail, Microsoft SkyDrive, Microsoft account, Windows Live Messenger, Microsoft Photo Gallery, Microsoft Movie Maker, Microsoft Mail Desktop, Microsoft Writer , Bing, MSN, and Office.com.

In addition to this change, Venture Beat spotted another modification that will allow Microsoft to share your data between its services.

But hey, at least it’s readable.

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