I can tell you what we actually do here (how we technically implement our policy).
We don't really have any interest in what's in your private files. The only exception here is where we've stated what we have a zero tolerance policy for child exploitation and we proactively scan for content uploaded to SkyDrive using technology called PhotoDNA (
Stories | Microsoft news, features, events, and press materials). You can read more about this technology and what it's used for at Microsoft as well as at Facebook and now Google to detect these images and catch criminals.
However, when you share your private files on the web, we do have an interest in making sure that the content you are sharing is not offensive in nature to the public at large. So we have mechanisms for people to "Report Abuse" in which case we'll review the content and ensure it's not offensive. We also have algorithms that attempt to detect "nude" shared content and disable sharing providing customers with a mechanism to contest that action. This is akin to "virus scanning" in that it's heuristic and therefore not perfect.
But,
the stated terms you quoted above from the ToS really applies to "Shared" content and not private content stored in your SkyDrive. Our view here really stems from the fact that we view SkyDrive as your hard drive in the cloud, and we believe it's important to behave that way (with the exceptions called out above).
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