Okay, well the story is as follows, briefly.
Since a good while ago, Microsoft have been including secret "system files" in their software which log your activities on your own computer, without giving you the option to do anything about it. They have also been writing subroutines into their software which use your internet connection to send information back to Microsoft servers. They have never been very clear about what information is logged in these "system files" or what info is being modemed back to Microsoft. This leads people to become paranoid and suspicious of them, since they are unlike many other software developers in that they are almost fanatical about not showing their hand.
Now, with Windows and M$ Office XP, the different threads in each of M$'s programs finally tie together to make a complete 'secret' spy situation. When an error occurs, in Windows XP (as i believe happens regularly) the system automatically emails Microsoft sending data about what you were doing when the error occured (and goodness knows what else). When you change your hardware, the system emails Microsoft to ask whether it should disable the computer (in case you have pirated the software and installed it on another computer). There will be many other things that i don't know about, since i don't use XP.
Aha! you cry! I'll just stay off the internet! Nope! wrong again. You need to connect to register, or the system will conk out altogether, and you need to register, not just after the first 14 days of use, but again in 6 months' time, and periodically after that. Of course in the meantime your computer is saving up 6 months' worth of data to send to Microsoft about stuff that is really not their business, or at least the potential is there.
Even if you did manage to get XP working without connecting for a while, it would still write those log files, and then, say you were to sell your computer or hard drive (or have it nicked!). Who's to say those cheeky little log files won't turn up for whoever has the drive next, all ready for them to splash your computer using habits all over the world, or sell your details to marketing companies? You might format your hard disc, or use one of those expensive file shredding utilities, but can you be sure? especially with XP's poor reputation for security...
Of course, Microsoft might not care what you do on or offline, and a lot of people say it's paranoid to worry about it because the odds of someone looking into your business are small, but how small are they really? And even if they don't use it, do you really want to give Microsoft the option of reading through your activities at their leisure? Remember this is the only company , to my knowledge that have screwed over BOTH Apple Computers and International Business Machines (IBM), not to mention an uncountable number of small businesses, private program developers and individual users.
Hope that answers your question...
